On January 1 st . 2022, X Company purchased 75% of the outstanding common shares and 50%

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Question:

On January 1^st. 2022, X Company purchased 75% of the outstanding common shares and 50% of the outstanding preferred shares of Y Ltd.

On January 1^st. 2022 the balance sheet and fair values of Y’s assets and liabilities were as follows:

Y COMPANY

Balance Sheet

As at January 1^st. 2022

Book Values……………………..Fair Values

Cash………………………………………………………………….….$130,000………………………….................$130,000

Accounts receivable……………………………………………… 120,000…………………………… ...............110,000

Inventory……………………………………………………………….. 320,000…………………………................. 290,000

Capital assets(net)………………………………………………….. 670,000

TOTAL ASSETS……………………………………..$1,240,000

Current liabilities…………………………………………………….$ 190,000…………………………..190,000

Long-term debt………………………………………………………… 300,000…………………………..300,000

Common shares……………………………………………………………..300,000

Preferred shares……………………………………………………………. 200,000**

Retained Earnings…………………………………………………………250,000

TOTAL OWNERS’EQUITY……………………………………………..$1,240,000

**Par value of a preferred share was $100/share.

X Company paid $450,000 for the common shares The preferred shares paid cumulative dividends of 5% of their stated value but dividends for 2020 and 2021 were unpaid. The shares were redeemable, at the option of the issuer, at a premium of $8.00/share.

At January 1^st. 2022, the capital assets of Y had a remaining useful life of ten years. Any unallocated acquisition differential would be treated as goodwill, which is assessed annually for impairment.

X accounts for its investment using the cost method and accounts for the non-controlling interest in its consolidated financial statements using the fair value enterprise method.

Required:-

(a) Prepare a schedule to split Y’s shareholders’ equity section at January 1^st.2022

(b) Calculate the consolidated goodwill at January 1^st.2022

(d) Calculate the non-controlling interest at January 1^st. 2022