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on january 1 year 5 pic company acquired 7 500 ordinary shares of sic company for 60 737287

On January 1, Year 5, Pic Company acquired 7,500 ordinary shares of Sic Company for $600,000. On January

1, Year 6, Pic Company acquired an additional 2,000 ordi nary shares of Sic Company for $166,000. On January 1, Year 5, the shareholders’ equity of Sic was as follows

:

Ordinary shares (10,000 no par value shares issued)

$200,000

Retained earnings

300,000

$500,000

The following are the statements of retained earnings for the two companies for Years 5 and 6:

Pic Sic

Year 5

Year 6

Year 5

Year 6

Retained earnings, beginning of year

$500,000

$530,000

$300,000

$310,000

Profit

Dividends

Retained earnings, end of year

130,000

(100,000)

$530,000

140,000

(120,000)

$550,000

100,000

(90,000)

$310,000

110,000

(90,000)

$330,000

Additional Information

• Pic uses the cost method to account for its investment in Sic.

Any acquisition di f fe r ential is allocated to customer contracts, which a r e expected to p r ovide futu r e benefits until December 31, Y ear 7. Neither com pany has any customer contracts r eco r ded on their separate entity r eco r ds.

The r e we r e no un r ealized p r ofits f r om inte r company transactions since the date of acquisition.

Required:

(a) Calculate consolidated profit attributable to Pic’s shareholders for Year 6.

(b) Calculate the following account balances for the consolidated statement of financial position at December 31, Y ear 6:

(i) Customer contracts

(ii) Non cont r olling inte r est

(iii) Retained earnings

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