80.2K

Verified Solution

Link Copied!

Adaris Group, headquartered in the UK$,$ owns a $70$ percent interest in Adaris Malaysia. The acquisition cost was $60$ million. At the date of acquisition, $1$ January $2012,$ Adaris Malaysia's book value was $18$ million, and its identifiable net assets were carried at amounts approximating fair value. Goodwill recognized for this acquisition was impaired by $6$ million during the period $2012-2014.$ Goodwill impairment for $2015,$ the current year, is $1\mathrm{.}5$ million. The following information relates to intercompany transactions:

In $2013,$ Adaris sold land with a book value of $600$ thousand to Adaris Malaysia for $900$ thousand. Adaris Malaysia sold the land to an outside party in $2015$ for $1\mathrm{.}1$ million.

Adaris sells merchandise to Adaris Malaysia at a markup of $20\%$ on cost$.$ Adaris Malaysia's beginning inventory contains $3\mathrm{.}6$ million in merchandise acquired from Adaris. Its ending inventory contains $3$ million in merchandise acquired from Adaris. Adaris sold merchandise priced at $78$ million to Adaris Malaysia during $2015.$

On $30$ June $2012,$ Adaris Malaysia sold equipment with a book value of $15$ million to Adaris for $19\mathrm{.}5$ million. The equipment had a remaining life of five years, straight$-$line. Adaris still holds the equipment.

It is now $31$ December $2015,$ the end of Adaris' accounting year. Adaris uses the complete equity method to account for its investment in Adaris Malaysia on its own books. Adaris also uses the IFRS alternative approach to valuing the noncontrolling interest in Adaris Malaysia. Below are the separate trial balances of Adaris Group and Adaris Malaysia at $31$ December $2015.$

$($in thousands$)$ Adaris

Group

Dr $($Cr$)$ Adaris

Malaysia

Dr $($Cr$)$

Current assets $10,5006,600$

Plant assets, net $70,03563,000$

Investment in Adaris Malaysia $61,755--$

Liabilities $(90,000)(36,000)$

Capital stock $(12,000)(9,000)$

Retained earnings, beginning $(37,500)(22,500)$

Sales revenue and gains $(180,000)(147,000)$

Equity in net income $(990)--$

Cost of goods sold $129,00063,000$

Operating expenses $49,20081,900$

Total $00$

Enter all answers in thousands.

a$.$ Calculate Adaris Group's equity in net income and the noncontrolling interest in net income for the current year.

Use negative signs with answers that reduce the net income amounts.

$($in thousands$)$ Equity

in NI Noncontrolling

Interest in NI

Adaris Malaysia's reported net income Answer

$0$

Answer

$0$

Goodwill impairment loss Answer

$0$

Answer

$0$

Downstream land sale gain confirmed Answer

$0$

Answer

$0$

Downstream beginning inventory profit confirmed Answer

$0$

Answer

$0$

Downstream ending inventory profit unconfirmed Answer

$0$

Answer

$0$

Upstream equipment sale profit confirmed Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

b$.$ Prepare a working paper to consolidate the trial balances of Adaris Group and Adaris Malaysia.

Remember to use negative signs in the Consolidated Balances Dr$($Cr$)$ column with credit balance answers.

Consolidation Working Paper

Trial Balances Taken From Books Eliminations

$($in thousands$)$

Adaris

Dr $($Cr$)$ Adaris Malaysia

Dr $($Cr$)$ Debit Credit Consolidated Balances

Dr $($Cr$)$

Current assets $10,5006,600$ Answer

$0$

$($I$-3)$ Answer

$0$

Plant assets, net $70,03563,000($I$-6)$ Answer

$0$

Answer

$0$

$($I$-5)$ Answer

$0$

Goodwill $----($R$)$ Answer

$0$

Answer

$0$

$($O$)$ Answer

$0$

Investment in Adaris Malaysia $61,755--($I$-1)$ Answer

$0$

Answer

$0$

$($O$)$ Answer

$0$

$($I$-2)$ Answer

$0$

Answer

$0$

$($E$)--$

Answer

$0$

$($R$)--$

Liabilities $(90,000)(36,000)$ Answer

$0$

Capital stock $(12,000)(9,000)($E$)$ Answer

$0$

Answer

$0$

Retained earnings, beg. $(37,500)(22,500)($I$-5)$ Answer

$0$

Answer

$0$

$($E$)$ Answer

$0$

Noncontrolling interest $----$ Answer

$0$

$($E$)$ Answer

$0$

Answer

$0$

$($N$)$

Sales revenue and gains $(180,000)(147,000)($I$-4)$ Answer

$0$

Answer

$0$

$($I$-1)$ Answer

$0$

Equity in net income $(990)($C$)$ Answer

$0$

Answer

$0$

Cost of goods sold $129,00063,000($I$-3)$ Answer

$0$

Answer

$0$

$($I$-2)$ Answer

$0$

Answer

$0$

$($I$-4)$

Operating expenses $49,20081,900($O$)$ Answer

$0$

Answer

$0$

$($I$-6)$ Answer

$0$

Noncontrolling interest in NI $----($N$)$ Answer

$0$

Answer

$0$

$00$ Answer

$0$

Answer

$0$

Answer

$0$

c$.$ Present the consolidated income statement for $2015$ and the consolidated balance sheet at $31$ December $2015.$

Do not use negative signs with any answers below.

Consolidated Income Statement

For the Year Ended $31$ December $2015$

$($in thousands$)$

Sales revenue and gains Answer

$0$

Costs of goods sold Answer

$0$

Gross margin Answer

$0$

Operating expenses Answer

$0$

Consolidated net income Answer

$0$

Noncontrolling interest in net income Answer

$0$

Consolidated net income to controlling interest Answer

$0$

Do not use negative signs with any of your answers below.

Consolidated Balance Sheet

$31$ December $2015$

$($in thousands$)$

Assets

Current assets Answer

$0$

Plant assets, net Answer

$0$

Goodwill Answer

$0$

Total assets Answer

$0$

Liabilities and stockholders' equity

Liabilities Answer

$0$

Stockholders' equity to

Answer & Explanation Solved by verified expert

See Answer