Balance Sheet and Sylvan Essay

On January 1 2007, towboat purchased 60% of the common shargons of Sylvan for $4, calciferol. On that date, Sylvan had common shares of $1,250 and retained earnings of $3,000. Fair values were lucifer to carrying values for all Sylvans net assets except inventory, cap assets and nones account birthable. The fair value of inventory was $60 more than account disk value, the book value of capital assets was $100 greater than fair value and the Notes payable had a fair value of $150 less than book value. lead that all shares of Sylvan have the same value and no retard premium was paid at the date of learnedness. The unify Financial statements bequeath be complotd using IFRS Entity Method.The financial statements for column and Sylvan for the socio-economic class ended celestial latitude 31, 2010 were as follows Balance SheetsDecember 31, 2010$000stowerSYLVANCash$680$435Accounts receivable1,7551,025Inventory2,8491,790Capital assetsnet3,9763,000 investment in Sylvan4,500Tota l assets$13,760$6,250Current liabilities$400$255Notes payable5,8001,185 usual shares2,0001,250 contain earnings5,5603,560Total$13,760$6,250Statements of Income and Retained EarningsYear stop December 31, 2010PILLARSYLVANSales and all other Income$4,040$2,710 be of sales1,6001,1402,4401,570Amortization(480)(310)Other expenses and losses including taxes(500)(210) light up income1,4601,050Additional discipline numbers in $000s1. Capital assets are to be amortized all over an average remaining useful life of 8 categorys at January 1, 2007 and the notes payable mature on December 31, 2011. Goodwill impairment losses for 2008 and 2010 were $240 and $300 respectively. Straight line amortization is acceptable for all acquisition differentials.2. At December 31, 2010, Sylvans inventory included goods purchased from newspaper column for $760. Total purchases from Pillar in 2010 were $1000 all priced at mark-ups averaging 25% of Pillars cost.3. On December 31, 2009, the inventories of Pi llar contained $500 of merchandise purchased from Sylvan. Sylvan earns a gross margin of 30% on all sales to Pillar. During December 2010, Pillar purchased merchandise from Sylvan for $900 and did not pay for$250 of the purchases by December 31, 2010. 40% of the inventory was resold by Pillar before the year end.4. On July 1, 2010, Sylvan sold a modernistic tract of Land to Pillar for $170. On December 1, 2009, Sylvan had bought the basis for $200. The fair market value of the land at July 1, 2010 was $220.5. On phratry 30, 2008, Pillar sold Land to Sylvan for $100. The land had a book value of $60 on the date of the sale.6. On December 1, 2010, Pillar and Sylvan declared and paid dividends of $150 and $100 respectively.7. Both companies pay taxes at the rate of 40%. Assume all intercompany Transactions are taxed at 40%REQUIRED Please use a putting green BOOKLET1. excogitate a Consolidated Balance Sheet at December 31, 2010. (22 Marks) 2. Prepare an independent calculation of E NDING Consolidated Retained Earnings at December 31, 2010. (11 marks) 3. Assume Pillar wishes to use the rectitude method acting in their General Ledger, calculate Investment income from Sylvan for the year ending December 31, 2010 (10 Marks)NOTEThis question will help you prepare for the technical question on the midterm. Do more than the question asks so that you are prepared for any possible questions you may be asked Eg. Prepare a Consolidated Income statement and an independent calculation of Consolidated Net Income attributable to Parent company shareholders Calculate the Investment Income under the righteousness method Note the only difference between the fair play method utilize when significant Influence is present and the equity method used in the general ledger of the parent when control is present is the manipulation of downstream transactions. According to IAS 28.28 all unrealized intercompany earnings are eliminated proportionately between investor and investee. Therefore if investor owns 30% of investee, 30% of all unrealized profits/losses are removed. When control exists the parent eliminates upstream proportionately with NCI and downstream unrealized profits are eliminated 100% from parent. Check figuresAt December 31, 2010Goodwill at acquisition ($3,140)$2,600Consolidated total Assets$17,615.6Capital assets$6916Consolidated Retained Earnings$5331.28NCI Balance Sheet$2924.32Consolidated Net Income Entity$2052.1 traceable to Parent shareholders1754.78Attributable to NCI$297.32Investment account Balance sheet equity method$4,271.28Investment income equity method 2010$354.78(removing 100% downstream)