On January 1, Year 5, Pic Company acquired 7,500 ordinary shares of Sic Company for $937,500....
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On January 1, Year 5, Pic Company acquired 7,500 ordinary shares of Sic Company for $937,500. On January 1, Year 6, Pic Company acquired an additional 2,000 ordinary shares of Sic Company for $218,000. On January 1, Year 5, the shareholders' equity of Sic was as follows: Ordinary shares (10,000 no par value shares issued) Retained earnings $200,000 315,000 $515,000 The following are the statements of retained earnings for the two companies for Years 5 and 6: Pic Sic Year 5 Year 6 Year 5 Year 6 $ 530,000 138,000 $ 568,000 173,000 (120,000) $ 621,000 Retained earnings, beginning of year Profit Dividends $315,000 139,000 (90,000) $364,000 257,500 (90,000) (100,000) $ 568,000 Retained earnings, end of year $364,000 $531,500 Additional Information • Pic uses the cost method to account for its investment in Sic. • Any acquisition differential is allocated to customer contracts, which are expected to provide future benefits until December 31, Year 7. Neither company has any customer contracts recorded on their separate-entity records. • There were no unrealized profits from intercompany transactions since the date of acquisition. Required: (a) Calculate consolidated profit attributable to Pic's shareholders for Year 6. (Omit $ sign in your response.) Consolidated profit attributable to Pic's shareholders 2$ (b) Calculate the following account balances for the consolidated statement of financial position at December 31, Year 6: (Omit $ sign in your response.) (i) Customer contracts (ii) Non-controlling interest (iii) Retained earnings On January 1, Year 5, Pic Company acquired 7,500 ordinary shares of Sic Company for $937,500. On January 1, Year 6, Pic Company acquired an additional 2,000 ordinary shares of Sic Company for $218,000. On January 1, Year 5, the shareholders' equity of Sic was as follows: Ordinary shares (10,000 no par value shares issued) Retained earnings $200,000 315,000 $515,000 The following are the statements of retained earnings for the two companies for Years 5 and 6: Pic Sic Year 5 Year 6 Year 5 Year 6 $ 530,000 138,000 $ 568,000 173,000 (120,000) $ 621,000 Retained earnings, beginning of year Profit Dividends $315,000 139,000 (90,000) $364,000 257,500 (90,000) (100,000) $ 568,000 Retained earnings, end of year $364,000 $531,500 Additional Information • Pic uses the cost method to account for its investment in Sic. • Any acquisition differential is allocated to customer contracts, which are expected to provide future benefits until December 31, Year 7. Neither company has any customer contracts recorded on their separate-entity records. • There were no unrealized profits from intercompany transactions since the date of acquisition. Required: (a) Calculate consolidated profit attributable to Pic's shareholders for Year 6. (Omit $ sign in your response.) Consolidated profit attributable to Pic's shareholders 2$ (b) Calculate the following account balances for the consolidated statement of financial position at December 31, Year 6: (Omit $ sign in your response.) (i) Customer contracts (ii) Non-controlling interest (iii) Retained earnings
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Modern Advanced Accounting in Canada
ISBN: 978-1259087554
8th edition
Authors: Hilton Murray, Herauf Darrell
Posted Date:
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