Homework Help is Here – Start Your Trial Now!
Business
Accounting
At December 31, 2014, George Weston Ltd. purchased 90% of the outstanding common shares of Bluenotes Ltd. for $8.55 million in cash. On that date, the shareholders' equity of Bluenotes totaled $8 million and consisted of $1 million in common shares and $7 million in retained earnings. Both companies use the straight-line method to calculate depreciation. Goodwill, if any arises as a result of this business combination, is written down when there is an impairment. Both George Weston and Bluenotes report under accounting standards for private enterprises and pay tax at the rate of 40%. For the year ending December 31, 2019, the statements of earnings for George Weston and Bluenotes were as follows: George Weston $22,500,000 16,000,000 Bluenotes $9,800,000 5,000,000 Sales and other revenue Cost of goods sold Depreciation expense Other expenses 2,500,000 2,000,000 1,800,000 $2,200,000 1,200,000 $1,600,000 Net income At December 31, 2019, the condensed statements of financial position for the two companies were as follows: George Weston $31,000,000 Bluenotes $13,500,000 Total assets Liabilities $5,000,000 12,100,000 $1,200,000 1,000,000 11,300,000 $13,500,000 No par common shares Retained earnings 13,900,000 $31,000,000 Total

At December 31, 2014, George Weston Ltd. purchased 90% of the outstanding common shares of Bluenotes Ltd. for $8.55 million in cash. On that date, the shareholders' equity of Bluenotes totaled $8 million and consisted of $1 million in common shares and $7 million in retained earnings. Both companies use the straight-line method to calculate depreciation. Goodwill, if any arises as a result of this business combination, is written down when there is an impairment. Both George Weston and Bluenotes report under accounting standards for private enterprises and pay tax at the rate of 40%. For the year ending December 31, 2019, the statements of earnings for George Weston and Bluenotes were as follows: George Weston $22,500,000 16,000,000 Bluenotes $9,800,000 5,000,000 Sales and other revenue Cost of goods sold Depreciation expense Other expenses 2,500,000 2,000,000 1,800,000 $2,200,000 1,200,000 $1,600,000 Net income At December 31, 2019, the condensed statements of financial position for the two companies were as follows: George Weston $31,000,000 Bluenotes $13,500,000 Total assets Liabilities $5,000,000 12,100,000 $1,200,000 1,000,000 11,300,000 $13,500,000 No par common shares Retained earnings 13,900,000 $31,000,000 Total

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 8MC
See similar textbooks
icon
Related questions
Question
100%

Please include all steps of calculations for my reference. Thanks!

Other Information: On December 31, 2014, Bluenotes had a building with a fair value that was $300,000 greater than its carrying value. The building had an estimated remaining useful life of 20 years. • On December 31, 2014, Bluenotes had an inventory with a fair value that was $200,000 less than its carrying value. This inventory was sold in 2016. • During 2019, George Weston sold merchandise to Bluenotes for $100,000, a price that includes a gross profit of $40,000. During 2019, 40% of this merchandise was resold by Bluenotes to third parties and the other 60% remains in its December 31, 2019 inventories. On December 31, 2018, the inventories of Bluenotes contained merchandise purchased from George Weston on which George Weston had recognized a gross profit of $20,000. • During 2019, George Weston declared and paid dividends of $300,000 while Bluenotes declared and paid dividends of $100,000. • George Weston accounts for its investment in Bluenotes using the cost method. • The retained earnings of George Weston as of December 31, 2018, was $12,000,000. On that date, Bluenotes had retained earnings of $9,800,000. Bluenotes has not issued any common shares since its acquisition by George Weston. There were no specific events or circumstances between 2015 and 2019 to indicate any impairment of goodwill. Required: Calculate consolidated net income for the year ending December 31, 2019. (You must also show the allocation of the consolidated NI to the parent and the NCI.)
Transcribed Image Text:Other Information: On December 31, 2014, Bluenotes had a building with a fair value that was $300,000 greater than its carrying value. The building had an estimated remaining useful life of 20 years. • On December 31, 2014, Bluenotes had an inventory with a fair value that was $200,000 less than its carrying value. This inventory was sold in 2016. • During 2019, George Weston sold merchandise to Bluenotes for $100,000, a price that includes a gross profit of $40,000. During 2019, 40% of this merchandise was resold by Bluenotes to third parties and the other 60% remains in its December 31, 2019 inventories. On December 31, 2018, the inventories of Bluenotes contained merchandise purchased from George Weston on which George Weston had recognized a gross profit of $20,000. • During 2019, George Weston declared and paid dividends of $300,000 while Bluenotes declared and paid dividends of $100,000. • George Weston accounts for its investment in Bluenotes using the cost method. • The retained earnings of George Weston as of December 31, 2018, was $12,000,000. On that date, Bluenotes had retained earnings of $9,800,000. Bluenotes has not issued any common shares since its acquisition by George Weston. There were no specific events or circumstances between 2015 and 2019 to indicate any impairment of goodwill. Required: Calculate consolidated net income for the year ending December 31, 2019. (You must also show the allocation of the consolidated NI to the parent and the NCI.)
At December 31, 2014, George Weston Ltd. purchased 90% of the outstanding common shares of Bluenotes Ltd. for $8.55 million in cash. On that date, the shareholders' equity of Bluenotes totaled $8 million and consisted of $1 million in common shares and $7 million in retained earnings. Both companies use the straight-line method to calculate depreciation. Goodwill, if any arises as a result of this business combination, is written down when there is an impairment. Both George Weston and Bluenotes report under accounting standards for private enterprises and pay tax at the rate of 40%. For the year ending December 31, 2019, the statements of earnings for George Weston and Bluenotes were as follows: George Weston $22,500,000 16,000,000 Bluenotes $9,800,000 5,000,000 Sales and other revenue Cost of goods sold Depreciation expense Other expenses 2,500,000 2,000,000 1,800,000 1,200,000 Net income $2,200,000 $1,600,000 At December 31, 2019, the condensed statements of financial position for the two companies were as follows: George Weston $31,000,000 Bluenotes $13,500,000 Total assets $5,000,000 12,100,000 13,900,000 $1,200,000 1,000,000 Liabilities No par common shares Retained earnings 11,300,000 $13,500,000 Total $31,000,000
Transcribed Image Text:At December 31, 2014, George Weston Ltd. purchased 90% of the outstanding common shares of Bluenotes Ltd. for $8.55 million in cash. On that date, the shareholders' equity of Bluenotes totaled $8 million and consisted of $1 million in common shares and $7 million in retained earnings. Both companies use the straight-line method to calculate depreciation. Goodwill, if any arises as a result of this business combination, is written down when there is an impairment. Both George Weston and Bluenotes report under accounting standards for private enterprises and pay tax at the rate of 40%. For the year ending December 31, 2019, the statements of earnings for George Weston and Bluenotes were as follows: George Weston $22,500,000 16,000,000 Bluenotes $9,800,000 5,000,000 Sales and other revenue Cost of goods sold Depreciation expense Other expenses 2,500,000 2,000,000 1,800,000 1,200,000 Net income $2,200,000 $1,600,000 At December 31, 2019, the condensed statements of financial position for the two companies were as follows: George Weston $31,000,000 Bluenotes $13,500,000 Total assets $5,000,000 12,100,000 13,900,000 $1,200,000 1,000,000 Liabilities No par common shares Retained earnings 11,300,000 $13,500,000 Total $31,000,000
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Techniques of Time Value Of Money
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
SWFT Comprehensive Volume 2019
SWFT Comprehensive Volume 2019
Accounting
ISBN:
9780357233306
Author:
Maloney
Publisher:
Cengage
Auditing: A Risk Based-Approach to Conducting a Q…
Auditing: A Risk Based-Approach to Conducting a Q…
Accounting
ISBN:
9781305080577
Author:
Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:
South-Western College Pub
SWFT Corp Partner Estates Trusts
SWFT Corp Partner Estates Trusts
Accounting
ISBN:
9780357161548
Author:
Raabe
Publisher:
Cengage
CONCEPTS IN FED.TAX., 2020-W/ACCESS
CONCEPTS IN FED.TAX., 2020-W/ACCESS
Accounting
ISBN:
9780357110362
Author:
Murphy
Publisher:
CENGAGE L
Auditing: A Risk Based-Approach (MindTap Course L…
Auditing: A Risk Based-Approach (MindTap Course L…
Accounting
ISBN:
9781337619455
Author:
Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS