AIT707FA WINTER 2009 ASSIGNMENT

AIT707FA WINTER 2009 ASSIGNMENT - $280,000. SOSs Balance...

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AIT707FA ASSIGNMENT WINTER 2009 5% OF TERM MARK QUESTION 1 Jean and John Inc had the following balance sheets on August 31, 2002: Jean Inc. John Inc. Fair Value Cash $1,200,000 $300,000 $300,000 Accounts Receivable $ 400,000 $ 64,000 $64,000 Inventory $ 240,000 $ 80,000 $60,000 Plant and Equipment (net) $ 860,000 $256,000 $300,000 Trademark - $ 20,000 $36,000 Total Assets $2,700,000 $720,000 Accounts Payable $1,500,000 $300,000 $300,000 Bonds Payable $ 600,000 $240,000 $210,000 Common Shares $ 500,000 $60,000 Retained Earnings $ 100,000 $120,000 Total Liabilities and Equity $2,700,000 $720,000 On August 31 , 2002, Jean’s date of acquisition, Jean Inc. purchased 90% of John Inc for $400,000. Required: 1. Prepare Jean Inc’s consolidated Balance Sheet on the date of acquisition using the Proprietary Theory. 2. Prepare Jean Inc’s consolidated Balance Sheet on the date of acquisition using the Parent Theory. 3. Prepare Jean Inc’s consolidated Balance Sheet on the date of acquisition using the Entity Theory.
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QUESTION 2 On January 1, 2000 XYZ purchased 40% of the outstanding voting shares of SOS Inc. for
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Unformatted text preview: $280,000. SOSs Balance Sheet on that date is shown below: Cash $300,000 Accounts Receivable $100,000 Patent $200,000 Assets $600,000 Accounts Payable $200,000 Common Stock $200,000 Retained Earnings $200,000 Total Liabilities and Equity $600,000 SOSs book values equalled their fair market values on the acquisition date, with the exception of the Patent, which was said to have a fair market value of $300,000. The patent had a remaining useful life of ten years from the acquisition date. The patent is being amortized on a straight line basis with no residual value at the end of its useful life. SOS reported Net Incomes of $40,000 and $50,000 for 2000 and 2001 respectively. SOS also paid dividends of $10,000 in each of the two years. Required: 1. Calculate the Goodwill on the date of acquisition. 2. Calculate the balance in XYZs Investment account as at December 31, 2001....
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AIT707FA WINTER 2009 ASSIGNMENT - $280,000. SOSs Balance...

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