Reference no: EM132954313

Craft Ltd. held 80 percent of the outstanding ordinary shares of Delta Corp. as at December 31, Year 12. In order to establish a closer relationship with Nonaffiliated Corporation, a major supplier to both Craft and Delta, all three companies agreed that Nonaffiliated would take an equity position in Delta. Accordingly, for a cash payment of $13.80 per share, Delta issued 12,250 additional ordinary shares to Nonaffiliated on December 31, Year 12. This was the last transaction that occurred on this date.

Statements of financial position for the two companies just prior to this transaction were as follows.

craft Ltd statment of financial position

Buildings and equipment(net)...748000
investment in delta ..................442960
inventory.......................................188500
accounts receivable................114000
cash..............................................83500
total 1576960
ordinary shares. 480000
retained earnings. 634000
Mortgage payable. 303000
accounts payable. 159960
total. 1576960

Delta Corp
statement of Financial Position

Buildings and Equipment 588000
inventory. 219000
Accounts Receivable. 173600
cash. 69200
total. 1049800
Ordinary shares(note1) 250000
Retained Earnings. 285575
accrued liabilities. 110000
Accounts payable. 404225
total. 1049800

Note 1: 49,000 common shares

Additional information

• Craft has used the equity method of accounting for its investment in Delta since it acquired its 80 percent interest in Delta in Year 2. At that time, the acquisition differential was entirely allocated to inventory and patent, which still exists but is not recorded on Delta's separate-entity books.
• There were no unrealized intercompany asset profits as at December 31, Year 12.

Required:

Problem 1: Make a consolidated statement of financial position as at December 31, Year 12.