Please do not give solution in image format ? esAdditional Information. Goodwill impairment tests have resulted in impairment losses totalling 60% of thegoodwill at the date of acquisition.• On January 1, Year 1, Gold issued $400,000 of 8 1/2 % bonds at 90 , maturing in 20years (on December 31, Year 20).• On January 1, Year 11, Pure acquired $200,000 of Gold's bonds on the open marketat a cost of $220,000.• On July 1, Year 8, Gold sold a patent to Pure for $73,000. The patent had a carryingamount on Gold's books of $52,000 on this date and an estimated remaining life ofseven years.• Pure uses tax allocation (40 % rate) and allocates bond gains between affiliateswhen it consolidates Gold.• Pure uses the cost method to account for its investment in Gold Company and thestraight-line method to account for the amortization of bond premiums anddiscounts.Required:Prepare a consolidated statement of financial position as at December 31, Year 11.(Amounts to be deducted should be indicated with a minus sign.)Pure CompanyConsolidated Statement of Financial PositionDecember 31, Year 11CashAccounts receivableInventoryPatent (net)Plant and equipmentAccumulated depreciationGoodwillLandTotal assetsAccounts payableBonds payableRetained earningsOrdinary sharesTotal liabilities and shareholders' equity$111,870)416,150$ 528,020$ 263,480$ 263,480 Pure Company purchased 70% of the ordinary shares of Gold Company on January 1,Year 6, for $486,400 when the latter company's accumulated depreciation, ordinaryshares, and retained earnings were $76,900, $500,000, and $43,000, respectively.Noncontrolling interest was valued at $198,000 by an independent business valuatorat the date of acquisition. On this date, an appraisal of the assets of Gold disclosed thefollowing differences:LandPlant and equipmentInventoryCarryingamountFairvalue$170,000 $229,000719,000 793,000151,000 133,000The plant and equipment had an estimated life of 20 years on this date.The statements of financial position of Pure and Gold, prepared on December 31, Year11, follow:LandPlant and equipmentLess accumulated depreciationInventoryAccounts receivableCashPatent (net of amortization)Investment in Gold Co. shares (equity method)Investment in Gold Co. bondsOrdinary sharesRetained earningsBonds payable (due Year 20)Accounts payablePure$ 116,000644,000(173,000)41,500486,400218,000244,000234,15051,670$1,862,720$ 750,0001,054,74057,980$1,862,720$Gold170,000964,000(202,000)191,000182,00060,200$1,365,200$ 500,000277,700382,000205,500$1,365,200Additional Information.• Goodwill impairment tests have resulted in impairment losses totalling 60% of thegoodwill at the date of acquisition.• On January 1, Year 1, Gold issued $400,000 of 8 1/2 % bonds at 90, maturing in 20years (on December 31, Year 20).On January 1, Year 11, Pure acquired $200,000 of Gold's bonds on the open marketat a cost of $220,000.• On July 1, Year 8, Gold sold a patent to Pure for $73,000. The patent had a carryingamount on Gold's books of $52,000 on this date and an estimated remaining life ofseven years.• Pure sicos tax allocation (40% ratal and allorates hond nains hatwaan affiliates

Combine the individual assets and liabilities and equity accounts:Consolidated Statement of…

Additional Information • Goodwill impairment tests have resulted in impairment losses totalling 60% of the goodwill at the date of acquisition. On January 1, Year 1, Gold issued $400,000 of 8 1/2 % bonds at 90, maturing in 20 years (on December 31, Year 20). • On January 1, Year 11, Pure acquired $200,000 of Gold's bonds on the open market at a cost of $220,000. On July 1, Year 8, Gold sold a patent to Pure for $73,000. The patent had a carrying amount on Gold's books of $52,000 on this date and an estimated remaining life of seven years. • Pure uses tax allocation (40% rate) and allocates bond gains between affiliates when it consolidates Gold. • Pure uses the cost method to account for its investment in Gold Company and the straight-line method to account for the amortization of bond premiums and discounts.

Additional Information • Goodwill impairment tests have resulted in impairment losses totalling 60% of the goodwill at the date of acquisition. On January 1, Year 1, Gold issued $400,000 of 8 1/2 % bonds at 90, maturing in 20 years (on December 31, Year 20). • On January 1, Year 11, Pure acquired $200,000 of Gold's bonds on the open market at a cost of $220,000. On July 1, Year 8, Gold sold a patent to Pure for $73,000. The patent had a carrying amount on Gold's books of $52,000 on this date and an estimated remaining life of seven years. • Pure uses tax allocation (40% rate) and allocates bond gains between affiliates when it consolidates Gold. • Pure uses the cost method to account for its investment in Gold Company and the straight-line method to account for the amortization of bond premiums and discounts.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 8MC

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