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##### Calculate the balances in the following consolidated statement of financial position line items as at December 31, 2012:

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On December 31, 2010, Perseus Ltd. acquired 64% of the common shares of Miram Ltd. for \$576,000. The carrying amount of Miram Ltd.?s identifiable net assets at the acquisition date was \$735,000. Miram Ltd.?s common shares and retained earnings were \$500,000 and \$235,000, respectively. The fair values of Miram Ltd.?s identifiable net assets were equal to their carrying amounts on December 31, 2010, except for the following;Fair Value Carrying Amount;Land \$300,000 \$175,000;Buildings 850,000 910,000;The building had 15 years remaining in its useful life. Perseus Ltd. uses the cost method to account for its investment in Miram Ltd.;Following are separate entity financial statements for 2012;PERSEUS LTD. AND MIRAM LTD.;Statements of Profit or Loss;year ended December 31, 2012;Perseus Ltd. Miram Ltd.;Sales revenue \$6,042,000 \$1,952,000;Management fee revenue 420,000 0;Investment income 32,000 0;6,494,000 1,952,000;Cost of goods sold 3,440,000 885,000;Depreciation expense 325,000 156,000;Other expenses, gains, and losses 1,529,000 596,000;Income tax expense 480,000 126,000;Total expenses 5,774,000 1,763,000;Net income \$ 720,000 \$ 189,000;PERSEUS LTD. AND MIRAM LTD.;Statements of Financial Position;December 31, 2012;Perseus Ltd. Miram Ltd.;Assets;Cash and receivables \$ 735,000 \$ 77,000;Inventory 840,000 235,000;Total current assets 1,575,000 312,000;Investment in Miram Ltd. 576,000 ?;Property, plant and equipment (net) 3,384,000 1,645,000;Total assets \$5,535,000 \$1,957,000;Liabilities and shareholders? equity;Liabilities \$1,870,000 \$1,050,000;Shareholders? equity;Ordinary shares 2,000,000 500,000;Retained earnings 1,665,000 407,000;Total shareholders? equity 3,665,000 907,000;Total liabilities and shareholders? equity \$5,535,000 \$1,957,000;Additional information;Goodwill was assessed at \$27,000 on December 31, 2012. There had not been any goodwill impairment prior to 2012.;During 2012, Perseus Ltd. had sales of \$270,000 to Miram Ltd. At December 31, 2012, \$70,000 of this inventory remained unsold. The gross profit on this inventory was \$30,000. At the beginning of 2012, Miram Ltd. held \$106,000 of inventory that had been purchased from Perseus Ltd. The gross profit relating to this beginning inventory was \$50,000.;On January 2, 2012, Miram Ltd. sold some equipment to Perseus Ltd. for \$315,000. Miram Ltd.?s carrying amount just prior to the sale was \$225,000. The gain is included in Miram Ltd.?s statement of profit or loss under ?other expenses, gains, and losses.? At the time of the sale, the equipment had 6 years of remaining useful life.;During 2012, Perseus Ltd. earned \$420,000 in management fees from Miram Ltd. Miram Ltd. reports management fee expenses as part of ?other expenses, gains and losses.?;During 2012, Miram Ltd. paid dividends of \$50,000 and Perseus Ltd. paid dividends of \$100,000.;The tax rate for both companies is 40%.;Perseus Ltd. uses the cost method to account for its investment in Miram Ltd. in its separate entity financial statements.;Perseus Ltd. uses the fair value enterprise method (entity theory) to value non-controlling interest (NCI).;Ignore deferred income taxes when allocating and amortizing the purchase price discrepancy.;Required;Prepare Perseus Ltd.?s consolidated statement of profit or loss for the year ended December 31, 2012. (7 marks);Calculate the balances in the following consolidated statement of financial position line items as at December 31, 2012;Property, plant, and equipment (net);Retained earnings

Paper#20821 | Written in 18-Jul-2015

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