On January 1, Year 5, Pic Company acquired 7,500 ordinary shares of Sic Company for $708,000. On January 1, Year 6, Pic Companyacquired an additional 2,000 ordinary shares of Sic Company for $212,000. On January 1, Year 5, the shareholders' equity of Sic wasas follows:Ordinary shares (10,000 no par value shares issued)Retained earnings$200,000303,000$503,000The following are the statements of retained earnings for the two companies for Years 5 and 6:PicYear 5Year 5Retained earnings, beginning of yearProfitDividendsRetained earnings, end of year$ 506,000165,000(100,000)$ 571,000Year 6$ 571,000160,500(120,000)$ 611,500$ 303,000118,500(90,000)$ 331,500SicYear 6$ 331,500156,500(90,000)$ 398,000 Additional Information⚫ Pic uses the cost method to account for its investment in Sic.• Any acquisition differential is allocated to customer contracts, which are expected to provide future benefits until December 31, Year7. Neither company has any customer contracts recorded on their separate-entity records.• There were no unrealized profits from intercompany transactions since the date of acquisition.Required:(a) Calculate consolidated profit attributable to Pic's shareholders for Year 6. (Omit $ sign in your response.)Consolidated profit attributable to Pic's shareholders$(b) Calculate the following account balances for the consolidated statement of financial position at December 31, Year 6: (Omit $ signin your response.)(i) Customer contracts(ii) Non-controlling interest(iii) Retained earnings

Equity Accounting method - This method is used for accounting of investments in associates and joint…

On January 1, Year 5, Pic Company acquired 7,500 ordinary shares of Sic Company for $708,000. On January 1, Year 6, Pic Company acquired an additional 2,000 ordinary shares of Sic Company for $212,000. On January 1, Year 5, the shareholders' equity of Sic was as follows: Ordinary shares (10,000 no par value shares issued) Retained earnings $200,000 303,000 $503,000 The following are the statements of retained earnings for the two companies for Years 5 and 6: Pic Year 5 Year 5 Retained earnings, beginning of year Profit Dividends Retained earnings, end of year $ 506,000 165,000 (100,000) $ 571,000 Year 6 $ 571,000 160,500 (120,000) $ 611,500 $ 303,000 118,500 (90,000) $ 331,500 Sic Year 6 $ 331,500 156,500 (90,000) $ 398,000

On January 1, Year 5, Pic Company acquired 7,500 ordinary shares of Sic Company for $708,000. On January 1, Year 6, Pic Company acquired an additional 2,000 ordinary shares of Sic Company for $212,000. On January 1, Year 5, the shareholders' equity of Sic was as follows: Ordinary shares (10,000 no par value shares issued) Retained earnings $200,000 303,000 $503,000 The following are the statements of retained earnings for the two companies for Years 5 and 6: Pic Year 5 Year 5 Retained earnings, beginning of year Profit Dividends Retained earnings, end of year $ 506,000 165,000 (100,000) $ 571,000 Year 6 $ 571,000 160,500 (120,000) $ 611,500 $ 303,000 118,500 (90,000) $ 331,500 Sic Year 6 $ 331,500 156,500 (90,000) $ 398,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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