Reference no: EM132531917

Question 1: Determine the goodwill on consolidation that will appear in the consolidated statement of financial position of the Remington Company, as at 31 December 2015 assuming the following information:

On 31 December 2015, the Remington Company purchased 75 per cent of the equity share of the Steele Company for $16 000. Steele's statement of financial position showed net assets of $14 000 before taking account of the following items:

1. The market value of Steele's properties at 31 December 2015 was $10 000 and was included in the statement of financial position at a carrying value of $9000.
2. As at 31 December 2015, Steele was in the process of negotiating an unsettled court case. If lost, Steele would be required to pay $10 000, however, the directors of Steele are confident that the claim will be successful.

Question 2: Identify whether A exercises control over B in each of the following situations. You should include a brief explanation to justify your answer.

1. A owns 55 per cent of the voting rights of B.
2. A owns 30 per cent of the voting rights of B and has the power to appoint or remove six out of eight members of the board of directors of B.
3. A owns 30 per cent of the voting rights of B and 100 per cent of the voting rights of C. C holds 25 per cent of the voting rights of B.

Question 3: Boston purchased goods from its subsidiary for $8000. The goods cost the subsidiary $5000. At Boston's reporting date, it still held all of the goods. The company's tax rate is 30%. Identify an appropriate consolidation adjustment journal entry for this transaction.