Writing Questions -
Q1. On April 1, 20X3, Sue Ltd. purchased 10% of Nina for $750,000. Both Sue and Nina have March 31 year-ends. For its 20X4 fiscal year-end, Nina reported net income of $600,000. On March 31, 20X4, Nina had a market value of $825,000 and it paid out dividends of $375,000. On July 31, 20X4, Nina paid out dividends of$150,000. Sue sold its investment in Nina on October 31, 20X4 for $1,020,000.
Required:
a. Prepare the 20X3 and 20X4 journal entries for Sue for the above transactions. Assume that Sue does not have significant influence.
b. Prepare the 20X3 and 20X4 journal entries for Sue for the above transactions. Assume that Sue does have significant influence.
Q2. On January 2, 20X6, John Ltd. acquired 60% of the voting shares of Sam Ltd. by issuing shares worth $399,000. John consolidates using entity theory.
Required: Prepare the consolidated balance sheet immediately following the acquisition of Sam Ltd.
Q3. John and Sam provided the following information for 20X6:
- During 20X6, Sam sold goods to John for $560,000. As of December 31, 20X6, John still had 25% of the goods in its inventory. John paid the same price for the goods as Sam's other customers.
- During 20X6,John sold goods to Sam for $532,000. As of December 31, 20X6, Sam still had 20% of the goods in its inventory. Sam paid the same price for the goods as John's other customers.
- Sam's warehouse and equipment have remaining useful lives of 10 years and 5 years, respectively. Both Sam and John use straight-line amortization.
- Neither John nor Sam has disposed of or has written off any property, plant, or equipment.
- There has been no impairment of goodwill.
Required: Prepare John's consolidated balance sheet, consolidated income statement, and consolidated statement of retained earnings for December 31, 20X6.
Q4. John and Sam provided the following information for 20X7:
- All the goods that were in inventory at December 31, 20X6 were sold to third parties by Apri120X7.
- During 20X7, Sam sold goods to John for $425,600. The gross margin is unchanged from 20X6. At December 31, 20X7, John still had 50% of the goods in its inventory.
- At the beginning of December, John sold goods to Sam for $106,400. John's gross margin on this sale was 50%. By the end of the year, Sam had not sold any of these goods.
Required: Calculate the following amounts for the year ended December 31, 20X7:
a. non-controlling interest in earnings that would appear on John's consolidated income statement.
b. non-controlling interest that would appear on John's consolidated balance sheet.
Attachment:- Assignment & Appendix.rar