Pure Company purchased 70% of the ordinary shares of Gold Company on January 1, Year 6, for $484,800 when the latter company's accumulated depreciation, ordinary shares, and retained earnings were $76,000, $500,000 and $41,600, respectively. Non-controlling interest was valued at $196,900 by an independent business valuator at the date of acquisition. On this date, an appraisal of the assets of Gold disclosed the following differences: Land Plant and equipment Inventory Carrying amount $ 161,000 708, 000 134,000 The plant and equipment had an estimated life of 20 years on this date. The statements of financial position of Pure and Gold, prepared on December 31, Year 11, follow: Land Plant and equipment Less accumulated depreciation Patent (net of amortization) Investment in Gold Co. shares (equity method) Investment in Gold Co. bonds Inventory Accounts receivable Cash Ordinary shares Retained earnings Bonds payable (due Year 20) Accounts payable Fair value $ 212, 000 783, 000 117,000 Pure $ 107,000 635, 000 (178, 000) 36, 500 575, 082 227,000 230, 000 225, 150 46,670 $1,904, 402 $750,000 1,097, 522 56, 880 Gold $ 161,000 951, 000 (211, 000) 185, 500 173, 000 59, 100 $1,318, 600 $ 500,000 236, 100 477, 500 105,000

Pure Company purchased 70% of the ordinary shares of Gold Company on January 1, Year 6, for $484,800 when the latter company's accumulated depreciation, ordinary shares, and retained earnings were $76,000, $500,000 and $41,600, respectively. Non-controlling interest was valued at $196,900 by an independent business valuator at the date of acquisition. On this date, an appraisal of the assets of Gold disclosed the following differences: Land Plant and equipment Inventory Carrying amount $ 161,000 708, 000 134,000 The plant and equipment had an estimated life of 20 years on this date. The statements of financial position of Pure and Gold, prepared on December 31, Year 11, follow: Land Plant and equipment Less accumulated depreciation Patent (net of amortization) Investment in Gold Co. shares (equity method) Investment in Gold Co. bonds Inventory Accounts receivable Cash Ordinary shares Retained earnings Bonds payable (due Year 20) Accounts payable Fair value $ 212, 000 783, 000 117,000 Pure $ 107,000 635, 000 (178, 000) 36, 500 575, 082 227,000 230, 000 225, 150 46,670 $1,904, 402 $750,000 1,097, 522 56, 880 Gold $ 161,000 951, 000 (211, 000) 185, 500 173, 000 59, 100 $1,318, 600 $ 500,000 236, 100 477, 500 105,000

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter8: Consolidated Tax Returns

Section: Chapter Questions

Problem 36P

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