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:

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

	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

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

(a) prepare Consolidated balance sheet (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required.)

Answer 1

Answer :

Albeniz Company Consolidated income statement
Sales (600000 + 400000)	1,000,000
Interest income	6,700
(a)	1,006,700
Cost of goods sold (334000 + 225000)	559,000
Distribution expenses (20,000+70,000 + 12000 +2100)	93,300
Selling and administration (207,000 + 74,000)	281,000
Financing expenses (1,700+6,000)	7,700
Income taxes (20,700 + 7,500)	28,200
(b)	969,200
Net income (a - b)	37500
Attributable to :
Albeniz's shareholders	34660
Non - controlling interest [20% *(17500 - 3300)]	2,840
	37500

Acquisition differential amortization schedule
					Amortization
Particulars	Carrying amount	Fair value	Life	Diff	Year 3,4 &5	Year 6
Inventory	20,000	50,000		30,000	30,000
Land	25,000	45,000		20,000	-
Equipment	60,000	78,000	15	18000	3600	1200
Misc intangibles	-	42000	20	42000	6300	2100
	Amortization in year 6					3300