Smart Ltd., a Canadian private corporation, owns 30% of the voting shares of Arch Ltd. In the currentyear, Arch Ltd. paid an eligible dividend of $120,000, which triggered a dividend refund of $45,000to Arch Ltd. Smart Ltd. also received a non-eligible dividends of $70,000 from its wholly-ownedsubsidiary, Magna Ltd., and non-eligible dividends of $50,000 from two Canadian publiccorporations in which Smart Ltd. owns less than 1% of the issued shares. Magna Ltd. carries on anactive business and, thus, did not receive a dividend refund.Determine the refundable Part IV tax payable by Smart Ltd. for the current year.

Step 1Identify the dividends received by Smart Ltd. and categorize them: Eligible dividend from Arch…

Answered: Smart Ltd., a Canadian private…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Christina Company (a U.S.-based company) has a subsidiary in Canada that began operations at the start of 2020 with assets of 143,000 Canadian dollars (CAD) and liabilities of CAD 76,000. During this initial year of operation, the subsidiary reported a profit of CAD 37,000. It distributed two dividends, each for CAD 6,100 with one dividend declared on March 1 and the other on October 1. Applicable U.S. dollar ($) exchange rates for 1 Canadian dollar follow: January 1, 2020 (start of business) March 1, 2020 Weighted average rate for 2020 October 1, 2020 December 31, 2020 $0.80 0.78 0.77 0.76 0.75 a. Assume that the Canadian dollar is this subsidiary's functional currency. What translation adjustment would the company report for the year 2020? b. Assume that on October 1, 2020, Christina entered into a forward exchange contract to hedge the net investment in this subsidiary. On that date, the company agreed to sell CAD 160,000 in three months at a forward exchange rate of $0.76/CAD1.…
P Inc. owns S Corp. For the current year, P reports net income (without consideration of its investment in S) of $185,000, and the subsidiary reports $105,000. The parent had a bond payable outstanding on January 1 with a carrying amount of $209,000. The subsidiary acquired the bond on that date for $196,000. During the current year, P reported interest expense of $18,000 while S reported interest income of $19,000 both related to the intra-entity bond payable. What is consolidated net income?
P Company acquires 15% of S Company’s ordinary shares for P500,000 cash and carries the investment using the equity method. A few months later, P purchases another 60% of S's ordinary shares for P2,160,000. At that date, S Company reports identifiable assets with a book value of P3,900,000 and a fair value of P5,100,000, and it has liabilities with a book value and fair value of P1,900,000. WHAT IS THE AMOUNT OF THE: Goodwill arising from the consolidation if it is to be computed using the proportionate basis or “Partial Goodwill” Goodwill arising from the consolidation if it is to be computed using the full (fair value basis of “Full/Gross-up” Goodwill arising from the consolidation if The fair value of the 25% non controlling interest in Subsidiary Company is P890,000.
Well Co. has a $20,000 receivable from Eight Co. and a $40,000 receivable from Cotten Corporation. Well also has a $30,000 payable to Sloane Co. Well owns 80% of Eight, 45% of Cotten, and 55% of Sloane. Eight and Sloane are consolidated subsidiaries, and Cotten is an equity-basis investee. At what amounts should Well report these balances in the consolidated financial statements? Receivables Payables OA. $40,000 $0 ○ B. $30,000 $30,000 C. $60,000 $30,000 O D. $0 $0
Cheyenne Ltd. is a Canadian publicly-traded business with a December 31 fiscal year end. In order to get a better return on some of its excess cash, Cheyenne purchased 130 common shares of AFS Corporation on July 1, 2023 at a price of $3 per share. Due to the nature of the investment, Cheyenne's management is accounting for the equity investment using the fair-value through other comprehensive income (FV-OCI) without recycling to net income. On August 1, 2023, AFS declared dividends of $2/share, and paid those dividends on August 20, 2023. On December 31, 2023, shares in AFS were trading at $5 per share. On September 15, 2024, Cheyenne sold the shares in AFS for $6 per share. Prepare the journal entries required to record the above transactions on the books of Cheyenne Ltd. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. List all debit…
Wooden Reed Inc. (WRI) issued 30,000 voting common shares to acquire all of the assets and liabilities of Creative Instrument Ltd. (CIL). On the acquisition date, WRI's shares were trading at $21.83 per share. After the transaction, CIL owned 20% of WRI's outstanding shares. Below are the statements of financial position of both companies immediately before the transaction, along with the fair values of CIL's assets and liabilities: WRI CIL Cash Accounts receivable Inventory Property, plant, equipment (net) Current liabilities Long-term debt Common shares Retained earnings $754,900 ■ $919,900 $265,000 O $100,000 S carrying value 75,000 CA 180,000 220,000 880,000 $ 1,355,000 $ 75,000 235,000 100,000 945,000 $ 1,355,000 If the consolidated statement of financial position was created immediately after the acquisition, the consolidated 2. common share account will be: A TTİNEN carrying value $ 35,000 TRT- 67,500 10 125,000 S climi 1 temagam de - SAM A TRILOŽ B 350,000 $ 577,500 $ 25,000…
Ted Ltd, an ultimate parent reporting entity, holds a 24% interest in the voting shares of Lasso Ltd. Equity accounting is applied to the interest held in Lasso Ltd. Additional information:  Lasso Ltd paid a dividend of $20,000 during the year.  At the date of acquisition of the shares in Lasso Ltd, Lasso Ltd owned an item of plant which was recorded at $60,000 less than its fair value. The remaining useful life of the asset at the date of Ted Ltd’s acquisition of the interest in Lasso Ltd was 4 years.  During the second year of operation Lasso Ltd sold some inventory to Ted Ltd at a selling price of $40,000. The cost of the inventory to Lasso Ltd was $30,000. Ted Ltd held 60% of the inventory on hand at the end of the second year. Required: a) Prepare the appropriate consolidation adjusting journal in respect of Lasso Ltd’s dividend. (Consolidation Journals Dr Cr) b) Prepare the appropriate consolidation adjusting journal, 2 years after the acquisition of Lasso Ltd shares by Ted…
John Ltd, an ultimate parent reporting entity, holds a 25% interest in the voting shares of Wick Ltd. Equity accounting is applied to the interest held in Wick Ltd. During the second year since the date of the investment in the associate, inventory was sold from Wick Ltd to John Ltd at a selling price of $86,000. The cost of the inventory to Wick Ltd was $42,000. John Ltd held 30% of the inventory on hand at the end of the second year. Required: Prepare the appropriate consolidation adjusting journal required in the second year. (Show your workings
Marathon Incorporated (a C corporation) reported $1,000,000 of taxable income in the current year. During the year, it distributed $100,000 as dividends to its shareholders as follows: • $5,000 to Guy, a 5 percent individual shareholder. • $15,000 to Little Rock Corporation, a 15 percent shareholder (C corporation). • $80,000 to other shareholders. Complete Form 1120 Schedule C for Little Rock Corporation to reflect its dividends-received deduction (use the most recent Form 1120 Schedule C available). (Use the 2021 tax rules regardless of the year on the form.)
sanju
DeMilo, Inc., owns 100 percent of the 43,000 outstanding shares of Ricardo, Inc. DeMilo currently carries the Investment in Ricardo account at $346,400 using the equity method. Ricardo issues 7,000 new shares to the public for $11.75 per share. How does this transaction affect the Investment in Ricardo account that appears on DeMilo’s financial records?
Godo

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