Question

Balance sheet and income statement data for two affiliated companies for the current year appear below:

BALANCE SHEET
As at December 31, Year 6
		Albeniz				Bach
Cash	$	40,000			$	21,000
Receivables		92,000				84,000
Inventories		56,000				45,000
Land		20,000				60,000
Plant and equipment		200,000				700,000
Accumulated depreciation		(80,000)				(350,000)
Investment in Bach Company (cost)		272,000
Advances to Bach Company		100,000
Total assets	$	700,000			$	560,000
Accounts payable	$	130,000			$	96,500
Advances payable						100,000
Common shares		400,000				200,000
Retained earnings		170,000				163,500
Total liabilities and shareholders' equity	$	700,000			$	560,000

INCOME STATEMENT
For the year ended December 31, Year 6
		Albeniz			Bach
Sales revenues	$	600,000		$	400,000
Interest income		6,700
Dividend income from Bach		6,400
Total revenues	$	613,100		$	400,000
Cost of goods sold		334,000			225,000
Distribution expense		20,000			70,000
Selling and administrative expense		207,000			74,000
Financing expense		1,700			6,000
Income taxes expense		20,700			7,500
Total expenses	$	(583,400)		$	(382,500)
Net income	$	29,700		$	17,500

Additional Information

• Albeniz acquired an 80% interest in Bach on January 1, Year 3, for $272,000. On that date, the following information was noted about specific net assets of Bach:

	Carrying Amount			Fair Value
Inventory	$	20,000		$	50,000
Land		25,000			45,000
Equipment (estimated useful life 15 years)		60,000			78,000
Misc. intangibles (estimated useful life 20 years)					42,000

Amortization expense is grouped with distribution expenses. Bach’s accumulated depreciation was $240,000 at the date of acquisition.

• On January 1, Year 3, Bach had a retained earnings balance of $30,000.
• Albeniz carries its investment at cost.

Required:

Prepare the following:

(a) Consolidated income statement (Input all values as positive numbers.)

	Albeniz Company Consolidated Income Statement For the Year Ended December 31, Year 6 0 0 Attributable to: Albeniz’s shareholders Non-controlling interest

Answer 1

Albeniz Company L000000 3750 Consolidated Income Statement for the year Ended del 31, year 6 Amant in $ sales (6ooow & Gowas) 6700 Interest Income @ 100670 Cost of Goods sold (334000 & 228000) 559000 Listribution Espeuses (20,000+ 70000 +1200+210) 93,300 284000 Selling and aduwwistration (207000+ 7,4ooo) 7700 financing Expeuses (1,700 46000) 28 200 Income Taxes (20,70 +7,00) 6 969200 Ned Income carb) Atribusable to 34660 Albeniz's Shareholders 2840 Non-Controlling Interest (207x (1750- 33 37500 Note (4) Acquisition Diferential diuortisation Schedule in $ Amostisation Particulars Carrying Amt fair value Life Pfl Year 3,485 Year 6 Inventory 20,000 56,000 30000 30,00 20000 4300o 20000 78,000 6oooo 3600 118000 42000 20 42000 Mise Intangibles Amortisation in year 6 3300 land 1200 2100 6300 Guipueut