Exam 9: Other Consolidation Reporting Issues

What is the amount of the temporary difference between straight line depreciation and capital cost allowance on December 31, 2016?

The following balance sheets have been prepared on December 31, 2016 for Clarke Corp. and Jensen Inc. Balance Sheets Additional Information: Clarke uses the cost method to account for its 50% interest in Jensen, which it acquired on January 1, 2013. On that date, Jensen's retained earnings were $20,000. The acquisition differential was fully amortized by the end of 2016. Clarke sold Land to Jensen during 2015 and recorded a $15,000 gain on the sale. Clarke is still using this Land. Clarke's December 31, 2016 inventory contained a profit of $10,000 recorded by Jensen. Jensen borrowed $20,000 from Clarke during 2016 interest-free. Jensen has not yet repaid any of its debt to Clarke. Both companies are subject to a tax rate of 20%. Clarke Jensen Cash \ 30,000 \ 20,000 Imwentory \ 70,000 \ 30,000 Accounts Receivable \ 180,000 \ 70,000 Imvestment in Jensen \ 200,000 Fixed Assets \ 500,000 \ 90,000 Accumulated Depreciation \ 280,000) (\ 30,000) Total Assets \ 700,000 \ Current Liabilities \ 120,000 \ 60,000 Long-Term Debt \ 400,000 \ 20,000 Common Shares \ 90,000 \ 40,000 Retained Earnings \ 90,000 \ 60,000 Liabifities and Equity \ 700,000 \ 180,000 -Prepare a Consolidated Balance Sheet for Clarke on December 31, 2016 assuming that Clarke's Investment in Jensen is a joint venture investment and is reported using proportionate consolidation.

Assume that the facts provided above with respect to the Jinxtor joint venture remain unchanged except that John receives $200,000 in return for investing its plant and equipment. What would be the recognizable gain on January 1, 2016 arising from John's investment in Jinxtor?

What is the amount of the temporary difference between straight line depreciation and capital cost allowance on December 31, 2017?

What is the amount of non-controlling interest that would appear on Seek's December 31, 2016 Consolidated Balance Sheet?

ABC invested $30 million in cash in DEF Inc, which was determined to be a VIE whose primary beneficiary is ABC Inc. The balance sheet of DEF on the acquisition date January 1, 2016 is shown below (all figures in millions $$): \[\begin{array} { | l | l | l | } \hline & \text { Book Value } & \text { Fair Value } \\ \hline \text { Cash } & \$ 30 & \$ 30 \\ \hline \text { Capital Assets } & \$ 90 & \$ 100 \\ \hline \text { Total Assets } & \$ 120 & \$ 130 \\ \hline \text { Liabilities } & \$50 & \$ 50 \\ \hline \text { Owner's Equity } & \\ \hline \text { ABC } & \$ 40 & \\ \hline \text { Non-Controlling Interest: } & \$ 30 & \\ \hline \text { Total Liabilities \& Equiy } & \$ 120 & \\ & \\ \hline & & \\ \hline \end{array}\] The fair value of DEF's non-controlling interest is $55. Required: Prepare the journal entry required for consolidation purposes on the date of acquisition assuming current Canadian GAAP.

Compute Alcor's Consolidated Retained Earnings as at December 31, 2016.

What is the total amount of deferred taxes that would appear on Seek's Consolidated Balance Sheet as at December 31, 2016?

Using only the Profit test, which of the following segment(s) would be reportable?

What is the amount of the Deferred Tax Asset or Liability on December 31, 2016?

X Ltd. and Y Ltd. formed a joint venture on joint venture called XY Inc. on January 1, 2018. X Ltd. Invested contributed equipment with a book value of $600,000 and a fair value of $2,100,000 for a 50% interest in the joint venture. On December 31, 2018, XY Inc. reported a net income of $612,000. The equipment transferred has an estimated useful life of 20 years. Ignore taxes. The same facts apply, but in this case assume that X Ltd. Receives a 50% interest plus $390,000 in cash (which was contributed by the other joint venturer). Record the contribution of assets, the share of earnings and the realization of the gain on transfer. With the cash provided a portion of the equipment is now considered to have been sold.

Assume that the facts provided above with respect to the Jinxtor Joint Venture remain unchanged except that John receives $200,000 in return for investing its plant and equipment. What would be the realized portion of the gain for the year ended on December 31, 2016 arising from John's investment in Jinxtor?

ABC Inc. has acquired all of the voting shares of DEF Inc and is gathering the necessary data to prepare consolidated financial statements. ABC paid $1,200,000 for its investment. Details of the companies' assets and liabilities on the acquisition date are shown below: Required: Assuming that DEF hasn't set up Deferred Tax Asset or Liability accounts, determine the amounts that would be used to prepare the Consolidated Balance Sheet on the acquisition date. Assume a tax rate of 50%. Fair Market Value Tar Basis Imentory \ 80,000 \ 80,000 Accounts Receivable \ 100,000 \- Land \ 200,000 \ 200,000 Buildings \ 300,000 \ 200,000 Equipment \ 250,000 \ 200,000 Accounts Pay able \ 70,000 \ 70,000

Globecorp International has six operating segments, the details of which are shown below. All figures shown are in thousands of dollars. Operating Segment Rerenues Profits Assets 01 \ 6,000 \ 1,050 \ 12,000 02 \ 4,800 \ 840 \ 10,500 03 \ 3,600 \ 720 \ 7,500 04 \ 1,800 \ 330 \ 4,500 05 \ 2,550 \ 405 \ 4,200 06 \ 900 \ 135 \ 1,800 -Using ONLY the operating profit test, determine which of the operating segments require separate disclosures.

Using only the Revenue test, which of the following segment(s) would be reportable?

The implied value of a variable interest entity (VIE) at acquisition under Canadian GAAP is equal to:

Which of the following concerning the distinction between joint operations and joint ventures is correct?

What is the total amount of intercompany sales and purchases that must be eliminated from the financial statements?

X Ltd. and Y Ltd. formed a joint venture on joint venture called XY Inc. on January 1, 2018. X Ltd. Invested contributed equipment with a book value of $600,000 and a fair value of $2,100,000 for a 50% interest in the joint venture. On December 31, 2018, XY Inc. reported a net income of $612,000. The equipment transferred has an estimated useful life of 20 years. Ignore taxes. Calculate the gain on the contribution of equipment and prepare the journal entries to record the events on January 1 and December 31, 2018. Also calculate under the equity method X Ltd.'s share of net income and the amount it will recognize.

Which of the following is not a requirement for a business component to be considered an Operating Segment under current Canadian GAAP?