On I January 20x4, P Co acquired 90% of S Co. Details of S Co as...

  

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On I January 20x4, P Co acquired 90% of S Co. Details of S Co as at the date of acquisition are as follows: Share capital..... Retained earnings as at 1 January 20x4... $1,000,000 150,000 $1,150,000 Fair value was different from book value of the following assets of S Co: Fair value Book value Fixed assets.. $900,000 $800,000 Remaining useful life for the fixed assets as at acquisition date was five years and residual value of the fixed assets was zero. Fair value of non-controlling interests as at acquisition date was $345,000. The financial statements of P Co and S Co for the year ended 31 December 20x5 are shown below. Assume a tax rate of 20% throughout. 230 ADVANCED FINANCIAL ACCOUNT For Year Ended 31 December 20x5 P Co S Co $10,000,000 (7,820,000) $ 2,180,000 (800,000) $3,500,000 (1,200,000) $2,300,000 (560,000) Sales Cost of sales. Gross profit.. Operating expenses $1,740,000 Operating profit . Dividend income from S.... $ 1,380,000 54,000 100,000 (90,000) Interest income - S and bank.. Interest expense to P $ 1,534,000 (306,800) $1,650,000 (330,000) Profit before tax Tax at 20% $ 1,227,200 (120,000) $1,320,000 (60,000) Profit after tax Dividends declared $ 1,107,200 1,300,000 $1,260,000 400,000 Profit retained Retained earnings, 1 January . Retained earnings, 31 December $ 2,407,200 $1,660,000 Statement of Financial Position As at 31 December 20x5 P Co S Co $ 3,200,000 4,500,000 500,000 1,250,000 1,300,000 200,000 320,000 Investment in S Co Fixed assets.. $2,000,000 Loan receivable from S Co Inventory.... Accounts receivable Other receivables.. Cash.. 670,000 500,000 120,000 $11,270,000 $3,290,000 Share capital.... Retained earnings Loan payable to P Accounts payable. Other payables . $ 3,000,000 2,407,200 $1,000,000 1,660,000 500,000 80,000 50,000 5,742,800 120,000 $11,270,000 $3,290,000 Required: 1. Prepare the consolidation adjustments for the year ended 31 December 20x5. * Drenare the consolidation worksheets for the year ended 31 December 20x5. A Reconcile the non-controlling interests' balance as at 31 December 20x5. On I January 20x4, P Co acquired 90% of S Co. Details of S Co as at the date of acquisition are as follows: Share capital..... Retained earnings as at 1 January 20x4... $1,000,000 150,000 $1,150,000 Fair value was different from book value of the following assets of S Co: Fair value Book value Fixed assets.. $900,000 $800,000 Remaining useful life for the fixed assets as at acquisition date was five years and residual value of the fixed assets was zero. Fair value of non-controlling interests as at acquisition date was $345,000. The financial statements of P Co and S Co for the year ended 31 December 20x5 are shown below. Assume a tax rate of 20% throughout. 230 ADVANCED FINANCIAL ACCOUNT For Year Ended 31 December 20x5 P Co S Co $10,000,000 (7,820,000) $ 2,180,000 (800,000) $3,500,000 (1,200,000) $2,300,000 (560,000) Sales Cost of sales. Gross profit.. Operating expenses $1,740,000 Operating profit . Dividend income from S.... $ 1,380,000 54,000 100,000 (90,000) Interest income - S and bank.. Interest expense to P $ 1,534,000 (306,800) $1,650,000 (330,000) Profit before tax Tax at 20% $ 1,227,200 (120,000) $1,320,000 (60,000) Profit after tax Dividends declared $ 1,107,200 1,300,000 $1,260,000 400,000 Profit retained Retained earnings, 1 January . Retained earnings, 31 December $ 2,407,200 $1,660,000 Statement of Financial Position As at 31 December 20x5 P Co S Co $ 3,200,000 4,500,000 500,000 1,250,000 1,300,000 200,000 320,000 Investment in S Co Fixed assets.. $2,000,000 Loan receivable from S Co Inventory.... Accounts receivable Other receivables.. Cash.. 670,000 500,000 120,000 $11,270,000 $3,290,000 Share capital.... Retained earnings Loan payable to P Accounts payable. Other payables . $ 3,000,000 2,407,200 $1,000,000 1,660,000 500,000 80,000 50,000 5,742,800 120,000 $11,270,000 $3,290,000 Required: 1. Prepare the consolidation adjustments for the year ended 31 December 20x5. * Drenare the consolidation worksheets for the year ended 31 December 20x5. A Reconcile the non-controlling interests' balance as at 31 December 20x5.

Answer rating: 100% (QA)

1 Consideration P paid for 90 equity of S 2 Value of Goodwill 1 3200000 3 4 CI 90 NCI 10 1150000 100... View the full answer