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Problem-1and10 - Problem 1(a Net income Pill Year 1(cost...

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Problem 1 (a) Net income Pill – Year 1 (cost method) 25,000 Less: Dividends from Sill (85% 9,000) 7,650 17,350 Net income of Sill – Year 1 40,000 Less: Goodwill impairment loss 1,500 38,500 85% 32,725 Consolidated net income attributable to Pill’s shareholders – Year 1 50,075 (b) Consolidated net income attributable to non-controlling interests – Year 1 [15% (40,000 – 1,500)] 5,775 (c) Investment in Sill – Dec. 31, Year 1 (cost method) 238,000 Income from Sill 32,725 270,725 Less: Dividends from Sill 7,650 Investment in Sill Dec. 31, Year 1 - equity method 263,075
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Problem 10 Cost of 80% of Storm 310,000 Implied value of 100% 387,500 Book value of Storm’s net assets = Book value of Storm’s shareholders’ equity Book value of Storm – Common shares 200,000 Retained earnings 60,000 260,000 Acquisition differential 127,500 Allocated: Fv – Bv Plant assets 40,000 Customer lists 24,000 64,000 Goodwill 63,500 Bal Amortization Loss Bal Dec. 31/Yr2 to Dec.31/Yr5 Yr6 Yr6 Dec. 31/Yr6 Plant assets 40,000 15,000 5,000 20,000 Customer lists 24,000 6,000 2,000 2,250 13,750 Goodwill 63,500 ----- ------ 13,500 50,000 127,500 21,000 7,000 15,750 83,750 Calculation of consolidated profit attributable to Palm’s shareholders Palm profit 96,000
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