I‘ve attached the assignment below, there are several questions without limit of words, but there's a lot of calculation involved.It's an exam, not research so the no reference needed.
Advanced Accounting I - ACS460 Marks Marks Question Available Awarded 1 15 2 10 3 13 4 30 5 20 6 16 7 10 114 INSTRUCTIONS: 1) All answers to be hand written or use Word or Excel 2). Submit through OWL “Assignments” 3) Examination is a total of 10 pages including cover page. QUESTION 1 (15 marks) On January 1, 2019 Prism Ltd. purchased 90% of Solstice Co. at a cost of $225,000. On this date, Solstice’s shareholders’ equity was as follows: Common shares (10,000) $100,000 Retained earnings 110,000 $210,000 · The book values of all of Solstice’s net assets were equal to fair market value, except for specialized equipment, which was undervalued by $40,000 · The equipment had an estimated useful life of 5 years · On July 1, 2019, Solstice issued an additional 2,000 shares for $75,000. Prism did not acquire any of these shares. · On October 1, 2019 Solstice’s share price had fallen to $30 per share. Prism purchased 1,000 shares at this price on the open market. · On December 31, 2019 Solstice reports a net income of $40,000 (earned evenly throughout the year) and declared dividends of $10,000 REQUIRED: a) Prepare an acquisition differential schedule for 2019 showing the controlling and non controlling interest’s share of the changes occurring throughout the year. (8 marks) b) Calculate the equity method balance in the investment in Solstice account as at December 31, 2019. (7 marks) Clearly show all calculations for impact of ownership changes. QUESTION 2 (10 marks) Financial statements of Dark Pearl Corp. and its subsidiary Laser Sight Inc. on December 31, 2019 are shown below. On January 1, 2019, Dark Pearl acquired 1500 common shares of Laser Sight for $225,000 cash. BALANCE SHEET As at December 31, 2019 Dark Pearl Laser Sight Cash $140,000 $ 1,000 Accounts Receivable 90,000 85,000 Inventories 55,000 48,000 Land 20,000 70,000 Plant and equipment (net) 220,000 400,000 Investment in Laser Sight 225,000 -- $750,000 $604,000 Accounts Payable $ 92,000 $ 50,000 Accrued Liabilities 33,000 10,000 Long-term liabilities -- 30,000 Preferred Stock -- 100,000 Common Stock 450,000 250,000 Retained Earnings 175,000 164,000 $750,000 $604,000 OTHER INFORMATION: 1. On January 1, 2019, the balance sheet of Laser Sight showed the following shareholders’ equity: $6 Preferred shares, cumulative, redeemable at $108 per share Issued and outstanding 1,000 shares $100,000 Common shares, (2,000 shares) 250,000 Deficit (note 1) (75,000) $275,000 Note 1: Dividends on preferred shares are two years in arrears at January 1, 2019. There were no dividends in arrears at December 31, 2019 2. The fair market values of Laser Sight’s net assets differ from carrying values as follows: Accounts receivable overstated by $2,000 Inventory understated by $10,000 Plant (5 yr life) understated by $75,000 Long-term liabilities understated by $5,000 (Matures Dec. 31, 2023) REQUIRED: a) Calculate goodwill at acquisition date, January 1, 2019. (7 marks) b) Calculate the non-controlling interest at December 31, 2019. (3 marks) QUESTION 3 (13 marks) On October 1, 2018, Aquaman Company purchased inventory from Storm Surge Corporation for euro (€) 200,000, with payment due on February 1, 2019. On October 1, 2018, Storm Surge delivered the inventory to Aquaman from its Toronto warehouse. Aquaman immediately hedged € 170,000 of the payable by buying a forward contract (at no cost) expiring on February 1, 2019. The following exchange rates occurred during the period (the forward rates shown all pertain to forward contracts expiring on February 1, 2019): Spot Rate Forward Rate October 1, 2018 €1 = C$1.40 €1 = C$1.50 December 31, 2018 €1 = C$1.48 €1 = C$1.59 February 1, 2019 €1 = C$1.52 €1 = C$1.52 REQUIRED: a) Indicate how the hedge entered into by Aquaman on October 1, 2018 should be classified. Support your answer with facts from the question and discuss how effective this hedge would be. (3 marks) b) Prepare the journal entries or disclosure to be recorded by Aquaman for the accounts payable and the fair value hedge on the following dates:(8 marks) i) October 1, 2018 ii) December 31, 2018 iii) February 1, 2019 c) Calculate the exchange gain or loss on both the accounts payable and the forward contract to be reported for the year ended December 31, 2019 (January 1 – December 31, 2019) (2 marks). QUESTION 4 (30 marks) Slingshot Corp is a foreign subsidiary of Porcelain Company, a Canadian company. Slingshot Corp was acquired December 31, 2018 and manufactures tableware for sale based on sales prices determined by world-wide competition. The chief financial officer of Slingshot Corp emailed the following December 31, 2019 financial statements, stated in Euro (€) to you, the CFO of Porcelain Company SLINGSHOT CORP Balance Sheets (in Euro (€)) Dec 31, 2019 Dec 31, 2018 Cash € 210,000 € 190,000 Accounts receivable 310,000 335,000 Inventory 550,000 500,000 Note receivable, due December 31, 2020 100,000 -- Delivery vans, net 430,000 275,000 €1,600,000 €1,300,000 Accounts payable € 150,000 € 180,000 Bonds payable 700,000 500,000 Common shares 300,000 300,000 Retained earnings 450,000 320,000 €1,600,000 €1,300,000 SLINGSHOT CORP Statement of Income and Retained Earnings years ended December 31, 2019, and 2018 (in Euro (€)) 2019 2018 Sales and interest revenue €1,700,000 €1,500,000 Cost of goods sold 1,200,000 1,210,000 Administration expenses 105,000 95,000 Bond interest expense 60,000 40,000 Amortization 85,000 55,000 Income taxes 80,000 32,000 Net income 170,000 68,000 Retained earnings , January 1 320,000 282,000 Dividends (40,000) (30,000) Retained earnings , December 31 € 450,000 € 320,000 Additional Information 1. Exchange rates: Jan 1, 2017 1 EURO = C $1.35 Jan 1, 2018 1 EURO = C $1.30 Mar 31, 2018 1 EURO = C $1.28 Average for July 1 - Dec 2018 1 EURO = C $1.26 Dec 31, 2018/Jan 1, 2019 1 EURO = C $1.29 March 31, 2019 1 EURO = C $1.33 Average for Jan 1 - Jun 30, 2019 1 EURO = C $1.35 Average for Jul 1 - Dec 31, 2019 1 EURO = C $1.40 Average for Apr 1 - Dec 31, 2019 1 EURO = C $1.34 Dec 31, 2019 1 EURO = C $1.41 Average for 2019 1 EURO = C $1.35 QUESTION 4 (30 marks) continued 2. Inventories on hand at December 31, 2019 and December 31, 2018 were purchased evenly over the final 6 months of 2019 and 2018 respectively. 3. Slingshot Corp issued €500,000 of its bonds on January 1, 2017 and €300,000 on January 1, 2019. All bonds pay interest at 8% and mature on December 31, 2024. On July 2, 2019, Slingshot Corp repurchased €100,000 of the bonds at their face value. 4. Slingshot Corp declared and paid dividends of €30,000 and €40,000 on March 31, 2018 and March 31, 2019, respectively. 5. Slingshot Corp leased its delivery vans until January 1, 2018. On that date, it acquired 10 delivery vans at a cost of €330,000. On March 31, 2019, it acquired an additional 8 delivery vans at a cost of €240,000. All of Slingshot Corp’s delivery vans have an estimated useful life of 6 years from the date of acquisition, with no expected salvage value. None of the delivery vans have been sold since January 1, 2018. 6. The notes receivable was received from one of Slingshot Corp’s clients on March 31, 2019. It pays interest at 10% and is due on December 31, 2022. 7. All sales, purchases, and other expenses are incurred evenly throughout the year. 8. All amounts for Slingshot Corp are stated in Euro (€). REQUIRED: a) Translate Slingshot Corp’s 2019 financial statements into Canadian dollars, the Canadian dollar as the functional currency (Income Statement, Retained Earnings, Balance Sheet) Include in your calculations (1) the gain or loss on net monetary assets (liabilities), (2) cost of goods sold, (3) amortization expense. (FCT) (23 marks) b) Assuming that Slingshot uses the Euro (not Canadian $) as