ANSWER
A)
Particulars | amount ($) |
Cash and receivables | 170000 |
Computing equipment | 5540000 |
Patented technology | 160000 |
Trade mark | 210000 |
Carrying value of total assets | 6080000 |
(-) liabilities | (245000) |
Carrying value of net assets | 5835000 |
Particular | amount ($) |
Payment by RR | 3900000 |
(-) book value acquired (5835000×25%) | (1458750) |
Payment in excess of book value | 2441250 |
Excess payment identified in specific assets | |
Computing equipment (6660000 - 5540000)= 1120000×25%= | (280000) |
Patent technology (4120000 - 160000)= 3960000×25%= | (990000) |
Trade mark (2120000 - 210000) = 1910000×25%= | (477500) |
GOODWILL | 693750 |
B)
Year 2017
Particular | amount ($) |
Income reported by ST 2017 | 1920000 |
RR Ownership | 25% |
Accural for 2017(1920000×25%)= | 480000 |
Less amortization expenses | |
Computing equipment (6660000 - 5540000)/7×25% | `(40000) |
Patented technology (4120000 - 160000)/3×25% | (330000) |
equity in ST earnings for 2017 | 110000 |
year 2018
Particular | amount ($) |
Income reported by ST in 2018 | 2105000 |
RR Ownership | 25% |
Accural for 2018(2105000×25%) | 526250 |
(-) amortization expenses | |
Computing equipment (6660000 - 5540000)/7×25% | (40000) |
Patented technology (4120000 - 160000)3×25% | (330000) |
Equity in ST earnings for 2018 | 156250 |
C)
Year 2017
Particular | amount ($) |
Cost of investment in ST 2017 | 3900000 |
Add equity in ST earnings for 2017 | 110000 |
Less shares in dividends ( 210000×25%) | (52500) |
Investment in ST to be reported in balance sheet for 2017 | 3957500 |
Year 2018
Particular | amount ($) |
Investment in ST reported on balance sheet for 2017 | 3957500 |
Add equity in ST earnings for 2018 | 156250 |
Less shares in dividends (220000×25%) | (55000) |
Investment in ST to be reported in balance sheet for 2018 | 4058750 |
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