Persaud Corp. convinced Bracebridge Inc. that the two companies should establish Renfrew Ltd. to build a new gambling casino in Renfrew. Although chances for the casino's success were relatively low, a local bank loaned $90 million to the new corporation, which built the casino at a cost of $83 million. Bracebridge purchased 100 percent of the initial common shares offering for $6 million, and Persaud agreed to supply 100 percent of the management which would include directing Renfrew's day-to-day activities. Persaud also agreed to guarantee the bank loan. Additionally, Persaud guaranteed a 18 percent return to Bracebridge on its investment for the first 10 years. Persaud will receive all profits in excess of the 18 percent return to Bracebridge. Immediately after the casino's construction, Persaud reported the following amounts (in millions): Cash Buildings & Equipment Accumulated Depreciation Accounts Payable Bonds Payable Common Shares Retained Earnings Assets Cash The only disclosure that Persaud currently provides in its financial reports about its relationships to Bracebridge and Renfrew is a brief footnote indicating that a contingent liability exists on its guarantee of Renfrew Corporation's debt. Persaud Corp. Consolidated Balance Sheet Required: Prepare a consolidated balance sheet for Persaud immediately following the casino's construction. (Enter your answers in millions of dollars. Negative amounts should be indicated by a minus sign.) Buildings & equipment Accumulated depreciation Bank loan payable $ Total assets Liabilities and Shareholder's equity Accounts payable Bank loan payable Common shares Retained earnings 6 112 (18) 4 56 Total liabilities plus shareholder's equity 20 20 $ $ 0 0
Persaud Corp. convinced Bracebridge Inc. that the two companies should establish Renfrew Ltd. to build a new gambling casino in Renfrew. Although chances for the casino's success were relatively low, a local bank loaned $90 million to the new corporation, which built the casino at a cost of $83 million. Bracebridge purchased 100 percent of the initial common shares offering for $6 million, and Persaud agreed to supply 100 percent of the management which would include directing Renfrew's day-to-day activities. Persaud also agreed to guarantee the bank loan. Additionally, Persaud guaranteed a 18 percent return to Bracebridge on its investment for the first 10 years. Persaud will receive all profits in excess of the 18 percent return to Bracebridge. Immediately after the casino's construction, Persaud reported the following amounts (in millions): Cash Buildings & Equipment Accumulated Depreciation Accounts Payable Bonds Payable Common Shares Retained Earnings Assets Cash The only disclosure that Persaud currently provides in its financial reports about its relationships to Bracebridge and Renfrew is a brief footnote indicating that a contingent liability exists on its guarantee of Renfrew Corporation's debt. Persaud Corp. Consolidated Balance Sheet Required: Prepare a consolidated balance sheet for Persaud immediately following the casino's construction. (Enter your answers in millions of dollars. Negative amounts should be indicated by a minus sign.) Buildings & equipment Accumulated depreciation Bank loan payable $ Total assets Liabilities and Shareholder's equity Accounts payable Bank loan payable Common shares Retained earnings 6 112 (18) 4 56 Total liabilities plus shareholder's equity 20 20 $ $ 0 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Alpesh
Transcribed Image Text:Persaud Corp. convinced Bracebridge Inc. that the two companies should establish Renfrew Ltd. to build a new gambling casino in
Renfrew. Although chances for the casino's success were relatively low, a local bank loaned $90 million to the new corporation, which
built the casino at a cost of $83 million. Bracebridge purchased 100 percent of the initial common shares offering for $6 million, and
Persaud agreed to supply 100 percent of the management which would include directing Renfrew's day-to-day activities. Persaud also
agreed to guarantee the bank loan. Additionally, Persaud guaranteed a 18 percent return to Bracebridge on its investment for the first
10 years. Persaud will receive all profits in excess of the 18 percent return to Bracebridge. Immediately after the casino's construction,
Persaud reported the following amounts (in millions):
Cash
Buildings & Equipment
Accumulated Depreciation
Accounts Payable
Bonds Payable
Common Shares
Retained Earnings
The only disclosure that Persaud currently provides in its financial reports about its relationships to Bracebridge and Renfrew is a brief
footnote indicating that a contingent liability exists on its guarantee of Renfrew Corporation's debt.
Persaud Corp.
Consolidated Balance Sheet
Required:
Prepare a consolidated balance sheet for Persaud immediately following the casino's construction. (Enter your answers in millions of
dollars. Negative amounts should be indicated by a minus sign.)
Assets
Cash
Buildings & equipment
Accumulated depreciation
Bank loan payable
$
Total assets
Liabilities and Shareholder's equity
Accounts payable
Bank loan payable
Common shares
Retained earnings
6
112
(18)
4
56
20
20
Total liabilities plus shareholder's equity
$
$
0
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education