Assignment Problems For Chapter 6
(The solutions for these problems are only available in
the solutions manual that has been provided to your instructor.)
Assignment Problem Six - 1 (Open Trial Balance - Profits - NCI At Fair Value)
On December 31, 2009, the Pumpkin Company purchased 75 percent of the outstanding
voting shares of the Squash Company for $4,200,000 in cash. On that date, the Squash
Company had No Par Common Stock of $3,900,000 and Retained Earnings of $600,000. All
of the Squash Company’s identifiable assets and liabilities had carrying values that were equal
to their fair values except for:
1. Inventories with fair values that were $60,000 more than their carrying values.
2. Land which had a fair value that was $300,000 greater than its carrying value.
3. Equipment which had a fair value of $270,000 more that its carrying value. Its
remaining useful life is 15 years with no expected salvage value.
4. Long-Term Liabilities which had fair values that were $90,000 more than their
carrying values and mature on December 31, 2015.
Pumpkin’s management elects to record the acquisition date non-controlling interest at its
fair value, measured on the basis of the price paid for the controlling interest.
The Balance Sheets of the Pumpkin Company and the Squash Company as at December 31,
2013 were as follows:
Pumpkin and Squash Companies
As At December 31, 2013
Cash and Current Receivables
Plant and Equipment (Net)
Investment in Squash (Cost)
No Par Common Stock
The Income Statements of the Pumpkin and Squash Companies for the year ending December
31, 2013 were as follows:
Canadian Advanced Accounting (2nd IC Edition) - Assignment Problems