Chapter 6 - Self Study Problems 1 and 2 plus P6-7, 6-9,6-10, 6-11 (1).xlsx

Chapter 6 - Self Study Problems 1 and 2 plus P6-7, 6-9,6-10, 6-11 (1).xlsx

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Self Study Problem 1 Computation and Allocation of Acquisition Differential Purchase Price 70% of Bow 5,600,000 Inmplied Value 100% of BOW 8,000,000 Less Book Value of the Net Assets of BOW Share Capital 2,000,000 Retained Earnings 6,000,000 8,000,000 Acquisition Differential - Less: FMVI = Fair Market Value - Book Value - Goodwill - Schedule of Realized / Unrealized Profit on Inventory for the year ended Inventory Downstream Opening January 1, Year 10 100,000 Closing December 31, Year 10 600,000 450,000 Upstream Opening, January 1, Year 10 - - Closing December 31, Year 10 - - Schedule of Realized / Unrealized Gain on Sale of Land for the Period ende Gain Tax Upstream Sale of Land to El on January 2, Year 8 100,000 40,000 Computation of Consolidated Net Income of El for the year ended Dec El's Net Income 3,200,000 Less Dividend from Bow 560,000 2,640,000 18,000 Purchases / Sales Add: Realized After Tax Profit on Opening Inventory Downstream
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81,000 Bow's Net Income 1,400,000 Less Amortization / Impairment for Year 10 - 1,400,000 Add: Realized After Tax Profit on Opening Inventory Upstream - - 1,400,000 El''s S"hare 70% Ncs Share of Net income 30% of 1,400,000 Computation of Consolidated Retained Earnings of El at Decemb El's Opening Retained Earnings January 1, Year 10 12,600,000 18,000 12,582,000 - 12,582,000 Bowès Opening Retained Earnings 9,800,000 Less; Pre acquisition Retained Earnings 6,000,000 3,800,000 Less Amortization / Impairments for the Previous Years (6-9) - - 60,000 3,740,000 Elès Share x70% 2,618,000 Consolidated Retained Earning January 1, Year 10 15,200,000 Add: Consolidated Net Income 3,557,000 Less Dividend of EL - 2,600,000 Consolidated Retained Earnings December 31, Year 10 16,157,000 Less Unrealized After Tax Profit on Closing Inventory Downstream Less Unrealized After Tax Profit on Closing Inventory Upstream Less Unrealized After Tax Profit on Opening Inventory Downstream (Closing Inventory of the Previous Year Less Unrealized After Tax Gain on Sale of Land Downstream (Adjustment of the Previous Year) Less Unrealized After Tax Profit on Opening Inventory Upstream (Closing Inventory of the Previous Year) Less Unrealized After Tax Gain on Sale of Land Upstream (Adjustment of the Previous Year)
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Computation of NCI Balance Sheet as at December 31, Ye Bow Share Capital December 31, Year 10 2,000,000 Bow Retained Earnings December 31, Year 10 10,400,000 12,400,000 Add Unamortized FMVI December 31, Year 10 - Less: Unrealized After Tax Profit on Closing Inventory Upstream - Less: Unrealized After Tax Gain on Sale of Land Upstream - 60,000 12,340,000 NCI Share 30% NCI Balance Sheet as at December 31, Year 10 3,702,000 EL Company Consolidated Statement of Net Income for the Year Ended December 31 EL BOW Sales and Other Income 28,800,000 13,000,000 Cost of Goodès Sold 18,000,000 8,200,000 Depreciation Expense 3,400,000 1,800,000 Income Tax and Other Expenses 4,200,000 1,600,000 Total Expenses 25,600,000 11,600,000 Net Income 3,200,000.00 1,400,000.00 Less NCI Share El Consolidted Net Income December 31, Year 10 EL Company Balance Sheet as at December 31, Year 10 El Bow Current Assets 15,000,000 8,800,000 Investment in BOW 5,600,000 Other Non Current Assets 23,000,000 17,400,000 Deferred Income Taxes Total Assets 43,600,000 26,200,000
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Liabilities 26,400,000 13,800,000 Common Shares 4,000,000 2,000,000 Retained Earnings 13,200,000 10,400,000 NCI Total Assets 43,600,000 26,200,000
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December 31 year 10 Tax 30,000 12,000 18,000 135,000 54,000 81,000 - - ### - - ### ed December 31, Year10 60,000 cember 31, Year 10 Profit on Inventory Profit After Tax Gain After Tax
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2,577,000 980,000 3,557,000 420,000 ber 31, Year 10 Closing RE = Opening RE + NI- Dividend Openign RE =
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