Assignment 9
Assignment 9
Assignment 9
b)
Cahs received by Amco 463,000
From amcos share of borrowing-40% 185,200
From newstars share-60% 277,800
Cash 463,000
Investment in Bearcat 1,197,000
P and E 1,190,000
Unrealized gain-Cntra account 188,000
Gain on transfer to newstar 78,654
203,346
1,190,000
188,000
282,000
77,200
35,200
9,400
77,200
35,200
9,400
The following are the Year 9 income statements of Kent Corp. and Laurier Enterprises.
INCOME STATEMENTS
For the year ended December 31, Year 9
Kent Laurier
Sales $ 3,180,000 $ 1,380,000
Other income 218,000 88,000
Gain on sale of land – 118,000
3,398,000 1,586,000
Cost of sales 1,445,000 605,000
Selling and administrative expenses 518,000 318,000
Other expenses 109,000 139,000
Income tax 418,000 168,000
2,490,000 1,230,000
Net income $ 908,000 $ 356,000
Additional Information
Kent acquired its 40% interest in the common shares of Laurier in Year 3 at a cost of $843,000 and uses the cost method to ac
The changes to acquisition differential schedule pertaining to Kent’s 40% interest showed the following write-off for Year 9:
Buildings $ 18,000
Goodwill impairment loss 22,000
40,000
Long-term liabilities 21,500
Total write-off —Year 9 $ 18,500
Depreciation expense and goodwill impairment loss are included with selling and administrative expenses.
In Year 9, rent amounting to $30,000 was paid by Laurier to Kent. Kent has recorded this as other in
In Year 6, Kent sold land to Laurier and recorded a profit of $93,000 on the transaction.
During Year 9, Laurier sold 30% of the land to an unrelated land development company.
During Year 9, Laurier paid dividends totalling $107,000.00
It has been established that Kent’s 40% interest would not be considered control in accordance with IFRS.
Assume a tax rate. 40%
Required:
(a) Assume that Laurier is a joint venture that is owned by Kent and two other unrelated venturers. Also assume that Kent acq
Kent Corp.
Income Statement
for the Year Ended December 31, Year 9
Sales 3,180,000
Other income $175,200.00
Investment income (Note 1) 130,596
3,485,796
Note 1:
Investment income
Laurier's income 356,000
Kent's percentage 40%
142400
less : Changes to acquisition differential 18,500
123,900
(b) Assume that Laurier is a joint operation. Prepare Kent’s income statement for Year 9 using proportionately adjusted financ
Kent Corp.
Consolidated Income Statement
for the Year Ended December 31, Year 9
Sales 3732000
Other income $198,400.00
Gain on sale of land $58,360.0
Total 3988760
Cost of sales 1687000
Selling & admin expenses 685200
Other expenses $131,100.0
Income tax $489,664.0
Total 2992964
Net income 995796
opment company.
so assume that Kent acquired its interest after Laurier’s initial formation, and that the acquisition differentials are therefore valid. Prepare
$6,696
tionately adjusted financial statements. (Input all amounts as positive values. Omit $ sign in your response.)
Intercompany proits before tax tax 40% after tax
land- kent selling in Year 6 $93,000
considered realized 60%
$55,800
considered unrealized year 6 40%
$37,200
realzied in Year 9 (30%) $11,160.0 $4,464.0 $6,696.0
unrealzied at end of year 9(70%) $26,040.0 $10,416.0 $15,624.0
ls are therefore valid. Prepare the income statement of Kent for Year 9 using the equity method. (Input all amounts as positive values. Om
amounts as positive values. Omit $ sign in your response.)