Lily Bakeries, located in Belgium, specializes in biscuit and cake products. Lily owns 75 percent of Hearty Foods, a French company acquired on January 1, 2010, for cash and stock totaling €150...

Lily Bakeries, located in Belgium, specializes in biscuit and cake products. Lily owns 75 percent of Hearty Foods, a French company acquired on January 1, 2010, for cash and stock totaling €150 million. Hearty’s book value at the date of acquisition was €70 million. Its assets and liabilities were fairly reported at the date of acquisition, except for these items: It is now December 31, 2014. Impairment testing on the acquired goodwill reveals that total impairment during the years 2010-2013 was €2.5 million, and impairment in 2014 is €0.75 million. Lily uses the complete equity method to account for its investment internally. The December 31,2014, trial balances of Lily and Hearty follow: Lily follows IFRS and uses the IFRS alternative valuation for goodwill and noncontrolling interests. Required a. Calculate the total goodwill arising from this acquisition. b. Prepare a schedule calculating Lily’s equity in net income of Hearty and the noncontrolling interest in Hearty’s net income for 2014. c. Prepare a working paper consolidating the trial balances of Lily and Hearty at December 31,2014. View Solution:

Lily Bakeries located in Belgium specializes in biscuit and cake