Description
Instructions – PLEASE READ THEM CAREFULLY
• The Assignment must be submitted on Blackboard (WORD format only) via
allocated folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be
reduced for poor presentation. This includes filling your information on the cover
page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students
or other resources without proper referencing will result in ZERO marks. No
exceptions.
• All answered must be typed using Times New Roman (Size 12, Double-spaced)
font. No pictures containing text will be accepted and will be considered
plagiarism).
• Submissions without this cover page will NOT be accepted.
1) Plant Inc. a calendar year reporting company acquired 80% of Seed Inc.’s outstanding
common stock for $ 484,000 on Dec. 31, 2018, when the fair value of Seed’s Net Assets was $
568,000. The following data summarize the fair value calculation:
(2
Marks)
Book Value Element
Common Stock
Retained Earnings
Amount $
150,000
135,000
Life Remaining
(9700)
48,000
96,000
40,000
108,700
568,000
2 Months
Indefinite
8 Years
5 Years
Indefinite
Under –Or-Over Valuation
Inventory
Land
Equipment
Covenant –Not-To Compete
Goodwill Element
Total Cost
Plant Inc. & Seed Inc.
Worksheet
As at Dec. 31, 2018
Balance Sheet
Cash
Account Receivable
Inventory
Investment in Seed Book Value
Excess Cost
Land
Building & Equipment
Accumulated Depreciation
Total Assets
Plant ($)
148,000
103,500
152,500
Seed ($)
47,000
118,000
126,000
228,000
226,400
168,000
400,000
-16,000
1,410,400
127,000
309,000
-102,000
625,000
Payable & Accruals
Long Term Assets
Common Stock
Retained Earnings
Total Liabilities & Equity
265,400
290,000
450,000
405,000
1,410,400
120,000
220,000
150,000
135,000
625,000
You are required to
(a) Prepare an Analysis of the Investment Account Through Dec. 31, 2018. Show clearly
Book Value and Excess Value calculation by preparing tables.
(b) Prepare all consolidation (Elimination Entries) as of Dec. 31, 2018.
(c) Prepare a Consolidated Worksheet as at Dec. 31, 2018.
2) The following intercompany transactions occurred during the year:
(1.5 Marks)
• Parent loaned $12500 to Sub. To keep things simple, assume that there is no
interest revenue or interest expense associated with this loan.
• Parent made a sale to Sub for $13000 cash. The inventory had originally
cost Parent $12220. Sub then sold that same inventory to an outsider for
$14000.
• Parent made a sale to Sub for $15000 cash. The inventory had originally
cost Parent $11280. Sub has not yet sold that same inventory to an outsider.
(Don’t forget equity method entry!)
Based on our “conceptual discussion,” what consolidation worksheet entries
would you make?
3) Peter Corp. purchased a machine on Jan 1, 2011 for $ 120,000 and estimated
that the machine would have a useful life of 10 years with no salvage value.
After two years, on Dec. 31, 2012, Peter corp. sold the machine to its 100 %
owned subsidiary, Sonu Co. for $ 100,000. Sonu Co. estimated that the asset
had a remaining useful life of five years.
What is the amount of the gain or loss recorded by Peter Corp. at the time of
the fixed transfer? What balance would have existed if the transfer had not
taken place?
Show the worksheet entry on Dec. 31, 2012 to eliminate the asset transfer to
make adjustment to change form ‘Actual’ to ‘As If’ the asset hadn’t been
transferred.
(1.5 Marks)
Purchase answer to see full
attachment