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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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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es 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. 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 Company Consolidated Statement of Financial Position December 31, Year 11 Cash Accounts receivable Inventory Patent (net) Plant and equipment Accumulated depreciation Goodwill Land Total assets Accounts payable Bonds payable Retained earnings Ordinary shares Total liabilities and shareholders' equity $ 111,870) 416,150 $ 528,020 $ 263,480 $ 263,480
Transcribed Image Text:es 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. 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 Company Consolidated Statement of Financial Position December 31, Year 11 Cash Accounts receivable Inventory Patent (net) Plant and equipment Accumulated depreciation Goodwill Land Total assets Accounts payable Bonds payable Retained earnings Ordinary shares Total 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, ordinary shares, and retained earnings were $76,900, $500,000, and $43,000, respectively. Noncontrolling interest was valued at $198,000 by an independent business valuator at the date of acquisition. On this date, an appraisal of the assets of Gold disclosed the following differences: Land Plant and equipment Inventory Carrying amount Fair value $170,000 $229,000 719,000 793,000 151,000 133,000 The 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, Year 11, follow: Land Plant and equipment Less accumulated depreciation Inventory Accounts receivable Cash Patent (net of amortization) Investment in Gold Co. shares (equity method) Investment in Gold Co. bonds Ordinary shares Retained earnings Bonds payable (due Year 20) Accounts payable Pure $ 116,000 644,000 (173,000) 41,500 486,400 218,000 244,000 234,150 51,670 $1,862,720 $ 750,000 1,054,740 57,980 $1,862,720 $ Gold 170,000 964,000 (202,000) 191,000 182,000 60,200 $1,365,200 $ 500,000 277,700 382,000 205,500 $1,365,200 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 sicos tax allocation (40% ratal and allorates hond nains hatwaan affiliates
Transcribed Image Text: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, ordinary shares, and retained earnings were $76,900, $500,000, and $43,000, respectively. Noncontrolling interest was valued at $198,000 by an independent business valuator at the date of acquisition. On this date, an appraisal of the assets of Gold disclosed the following differences: Land Plant and equipment Inventory Carrying amount Fair value $170,000 $229,000 719,000 793,000 151,000 133,000 The 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, Year 11, follow: Land Plant and equipment Less accumulated depreciation Inventory Accounts receivable Cash Patent (net of amortization) Investment in Gold Co. shares (equity method) Investment in Gold Co. bonds Ordinary shares Retained earnings Bonds payable (due Year 20) Accounts payable Pure $ 116,000 644,000 (173,000) 41,500 486,400 218,000 244,000 234,150 51,670 $1,862,720 $ 750,000 1,054,740 57,980 $1,862,720 $ Gold 170,000 964,000 (202,000) 191,000 182,000 60,200 $1,365,200 $ 500,000 277,700 382,000 205,500 $1,365,200 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 sicos tax allocation (40% ratal and allorates hond nains hatwaan affiliates
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