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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)


Retained earnings



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







Retained earnings, end of year













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.


(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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