Case 1

Question 4 (35 marks; 53 minutes) On airy latitude 31, 2006, Clater family purchased 75 percent of the outstanding voting shargons of the Mak accompany for $3,000,000 in cash. On that date, Mak had common shares of $2,000,000 and Retained Earnings of $1,000,000. On declination 31, 2006 all of the identifiable assets and liabilities of Mak had fair look ons that were have-to muscularity with to their carrying take to bes with the following exceptions: 1. Inventories with fair values that were $400,000 slight than their carrying values. 2. modify land with a carrying value of $700,000 and a fair value that was $800,000 great than its carrying value. 3. Long-term liabilities, maturing on January 1, 2010, with fair values that were $200,000 less than their carrying values. The carrying value of the liabilities is $1,000,000 and was issued at Par. The coupon rate on the liabilities is 3% and the up-to-date market rate is 4%. Interest is give annu ally. Clater manipulation the effective interest method to calculate amortization. In its item-by-item entity records, Clater carries its investment in Mak at cost. The land which was on the books of the Mak connection on celestial latitude 31,2006 has not been sold as at December 31, 2009.

Financial statements for Clater and Mak for the social class close December 31, 2009 are as follows: Income Statements For the Year Ending December 31, 2009 | Clater| Mak| Merchandise sales| $5,000,000| $2,000,000| Other revenues| 1,000,000| 500,000| Total Revenues| $6,000,000| $2,500,000| Cost of goods exchange| $2,000,000| $1,000,000| A! mortization put down| 400,000| 300,000| Other expenses| 600,000| 400,000| Total expenses| $3,000,000| $1,700,000| salary income| $3,000,000| $800,000| Statement of Retained Earnings For the year ending December 31, 2009 | Clater| Mak| Opening sense of balance| $10,000,000| $1,600,000| Net income| 3,000,000| 800,000| Balance easy| $13,000,000| $2,400,000| Dividends declared| (1,000,000)|...If you want to get a replete essay, put up it on our website: OrderCustomPaper.com

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