The financial statements of Company Permanent and its subsidiary Company Senior are shown below. Statement of Financial Position As at 31 December 2020 Permanent Senior Investment in Senior 759,000 Other net assets 4,354,400 1,000,000 5,113,400 1,000,000 2,305,000 2,082,000 Share capital 310,000 Retained earnings Liability 540,055 726,400 149,945 5.113,400 1,000,000 Income Statement and Partial Statement of Changes in Equity For the Year Ended 31 December 2020 Permanent Senior Sales Cost of sales 1,000,000 647,000 (900,000) (313,945) Dividend income from Senior 240,000 340,000 (202,000) 138,000 2,050,000 (106,000). 2,082,000 Profit before tax Тах 333,055 _(3,000) 330,055 Profit after tax Retained earnings, 1 January 2020 Dividends declared Retained earnings, 31 December 2020 510,000 (300,000) 540,055 A) Permanent acquired 80% of interest in Senior on 1 January 2018 when the shareholders' equity of Senior was as follows: Share capital Retained earnings $310,000 $140,000 Fair value of identifiable net assets of Senior was close to the book value. B) Non-controlling interest is calculated on a fair value basis, and it was $121,000 on 1 January 2018. C) Goodwill impairment was $70,000 in 2018 and S60,000 in 2020. D) Intercompany sales from Senior to Permanent during 2020 was $100,000. Cost to Senior was $90,000. All the purchase was still kept by Permanent as at 31 December 2020.
The financial statements of Company Permanent and its subsidiary Company Senior are shown below. Statement of Financial Position As at 31 December 2020 Permanent Senior Investment in Senior 759,000 Other net assets 4,354,400 1,000,000 5,113,400 1,000,000 2,305,000 2,082,000 Share capital 310,000 Retained earnings Liability 540,055 726,400 149,945 5.113,400 1,000,000 Income Statement and Partial Statement of Changes in Equity For the Year Ended 31 December 2020 Permanent Senior Sales Cost of sales 1,000,000 647,000 (900,000) (313,945) Dividend income from Senior 240,000 340,000 (202,000) 138,000 2,050,000 (106,000). 2,082,000 Profit before tax Тах 333,055 _(3,000) 330,055 Profit after tax Retained earnings, 1 January 2020 Dividends declared Retained earnings, 31 December 2020 510,000 (300,000) 540,055 A) Permanent acquired 80% of interest in Senior on 1 January 2018 when the shareholders' equity of Senior was as follows: Share capital Retained earnings $310,000 $140,000 Fair value of identifiable net assets of Senior was close to the book value. B) Non-controlling interest is calculated on a fair value basis, and it was $121,000 on 1 January 2018. C) Goodwill impairment was $70,000 in 2018 and S60,000 in 2020. D) Intercompany sales from Senior to Permanent during 2020 was $100,000. Cost to Senior was $90,000. All the purchase was still kept by Permanent as at 31 December 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Prepare the consolidation adjustment and elimination entries for the year ended 31 December 2020. Show all relevant workings. Worksheets are not required.
Transcribed Image Text:The financial statements of Company Permanent and its subsidiary Company Senior
are shown below.
Statement of Financial Position
As at 31 December 2020
Permanent
24
Senior
Investment in Senior
759,000
Other net assets
4,354,400 1,000,000
5,113,400 1,000,000
2,305,000
Share capital
Retained earnings
310,000
540,055
149,945
2,082,000
Liability
726,400
5,113,400 1,000,000
Income Statement and Partial Statement of Changes in Equity
For the Year Ended 31 December 2020
Permanent
Senior
2$
Sales
1,000,000
(900,000)
240,000
340,000
647.000
Cost of sales
(313,945)
Dividend income from Senior
Profit before tax
333,055
Тах
(202,000)
138,000
(3,000)
330,055
Profit after tax
Retained earnings, 1 January 2020
2,050,000
510,000
(300,000)
540,055
Dividends declared
(106,000)
Retained earnings, 31 December 2020
2,082,000
(A) Permanent acquired 80% of interest in Senior on 1 January 2018 when the
shareholders' equity of Senior was as follows:
Share capital
Retained earnings
$310,000
$140,000
Fair value of identifiable net assets of Senior was close to the book value.
(B) Non-controlling interest is calculated on a fair value basis, and it was $121,000 on
1 January 2018.
(C) Goodwill impairment was $70,000 in 2018 and $60,000 in 2020.
(D) Intercompany sales from Senior to Permanent during 2020 was $100,000. Cost to
Senior was $90,000. All the purchase was still kept by Permanent as at 31
December 2020.
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