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At the beginning of 20X3, Jong Ltd. acquired 80% of the outstanding shares of Nye Co. for $1,400,000. At the acquisition date, Nye's shareholders' equity consisted of the following:
Common shares $350,000
Retained earnings 875,000
At the time of acquisition, all of Nye's net identifiable assets had carrying values that equalled their fair values with the exception of its patents. The fair value of the patents exceeded their carrying values by $525,000 and had a remaining life of 8 years.
The trial balances for Jong and Nye for December 31, 20X6 are as follows: Jong Ltd. Nye Co.
DR
CR
Cash
700,000
350,000
Accounts receivable
1,400,000
249,200
Inventory
2,100,000
1,575,000
Plant and equipment
9,800,000
1,750,000
Accumulated amortization
2,800,000
Patents
280,000
Investment in Nye
Investment in Jong bonds
170,800
Accounts payable
1,744,400
1,734,950
Bonds payable
Premium on bonds payable
5,600
Common shares
3,150,000
Retained earnings
7,000,000
Dividends
420,000
175,000
Sales
3,430,000
Dividend revenue
140,000
Interest revenue
15,050
Cost of goods sold
1,680,000
595,000
Operating expenses
673,400
210,000
Interest expense
26,600
Income tax expense
_________
245,000
________
18,620,000
5,600,000
Additional information:
Required:
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