X Co acquired of Y Co on January Year when Y Co had common shares of $ and retained earnings of $ The acquisition differential was allocated as follows on this date:
Inventory $
Equipment year life
Total acquisition differential $
Since this date the following events have occurred:
Year
Y Co reported a net income of $ and paid dividends of $
On July X Co sold land to Y Co for $ This land was carried in the records of X Co at $
On December Year the inventory of X Co contained an intercompany profit of $
X Co reported a net income of $ from its own operations.
Year
Y Co reported a net loss of $ and paid dividends of $
Y Co sold the land that it purchased from X Co to an unrelated company for $
On December Year the inventory of Y Co contained an intercompany profit of $
X Co reported a net income from its own operations of $
Required:
Assume a tax rate.
