Question

PROBLEMS P 8-1 Mid Year Acquisition, Overvalued Inventory, Upstream sale of Land On July 1,2014, Adnan SAL acquired 75 percent of Rayan SAL for $3,750,000. Rayan SAL holders' equity on July 1, 2014 was $4,850,000. The trial balance for both companies for the year December 31, 2014 is as follows (in thousands): stock Debits Rayan SAL $ 900 $ 1,100 Adnan SAL Cash Accounts receivable Dividend receivable Inventory Land Equipment Investment in Rayan SAL Cost of sales Other expenses Dividends $ 1,200 $ 2,000 112.5 $ 300 $ 1,200 3,000 $ 3,637.5 $ 3,900 1,100 $ 1,300 $ 2,400 $ 350 $ 2,700 $ 950 250 $9,950 0 Total S 16,450 Credits Accounts payable Dividend payable Common stock Retained Earnings Sales Gain on sale of land 2,200 $ 550 $ 150 $ 3,000 $1,300 $ 4,800 S 150 $9,950 $5,000 1,850 $ 7,400 0 $16,450 Total ADDITIONAL INFORMATION: 1. The book value of Rayan SAL' s net identifiable assets at the acquisition date was equal to the fair value, except for inventory that was overvalued by $100,000. The inventory was sold in 2014. 2. On August 1, 2014, Rayan SAL sold land to Adnan SAL with a gain of $150,000. Rayan SAL sold the land to outside party in 2016. 3. Rayan SAL declared dividend $100,000 and $150,000 on March 1, 2014, and December 31, 2014 respectively 4. Rayan SAL's income and expenses occurred proportionately during the year REQUIRED: Prepare a workpaper to consolidate the financial statement of Adnan SAL and subsidiary fon the year ended December 31, 2014.

can you help me with this question please... Thank you

Answer 1

Eauity.ㅡㅡㅡㅡ 4 $50.000 eHas m en (100,000) \,-250,00 4.750,000," ? "( Ineries han 500,000 Pest 1236,000 x75% Phe 114750,0 5X1Sy. 3,562,Soo g,37,500 -

hely totmatian netwerk of 3.53 2,500 abon etls Shbuld he added heserve ん、N-1 3,750,00

Note- 1. Question clearly mentioned that only working papers,so the same are done. Financials were not drafted

2. Inter-company adjustments like unrecognized profit on sale of land is not to be considered in profit computation