a)

Fair value of P and E transferred 1,660,000

Carrying value on Amco's books 1,190,000
Gian on transfer to joint venture 470,000
Anco's portion- 40% unreliazed 188,000 -
Newstars portion-60% 282,000
Recognized on transfer 282,000
Recognized later -

Jan 1, Year 1 Cash 463,000

Investment in Bearcat 1,197,000
P and E
Unrealized gain-Cntra account
Gain on transfer to newstar

Dec 31 , Year Investment in bearcat 77,200

Equity Eranings

Dec 31, Year Dividnet receivabe 35,200

Investmnet in bearcat

Dec 31, Year Unrealzied gain-Contra acc 9,400

Gain on transfer to newstar

b)
Cahs received by Amco 463,000
From amcos share of borrowing-40% 185,200
From newstars share-60% 277,800

Sales proceeds 277,800

carrying value sold 199,146
Gain on transfer to newstar 78,654

Cash 463,000
Investment in Bearcat 1,197,000
P and E 1,190,000
Unrealized gain-Cntra account 188,000
Gain on transfer to newstar 78,654
203,346

Investment in bearcat 77,200

Equity Eranings

Dividnet receivabe 35,200

 Investmnet in bearcat

Unrealzied gain-Contra acc 9,400

Gain on transfer to newstar
reported profit 193,000
amcos portion 0.40
dividend 88,000
useful life of plant 20

1,190,000
188,000
282,000

77,200

35,200

9,400

77,200
35,200

9,400
The following are the Year 9 income statements of Kent Corp. and Laurier Enterprises.

INCOME STATEMENTS
For the year ended December 31, Year 9
Kent Laurier
Sales $ 3,180,000 $ 1,380,000
Other income 218,000 88,000
Gain on sale of land – 118,000
3,398,000 1,586,000
Cost of sales 1,445,000 605,000
Selling and administrative expenses 518,000 318,000
Other expenses 109,000 139,000
Income tax 418,000 168,000
2,490,000 1,230,000
Net income $ 908,000 $ 356,000

Additional Information

Kent acquired its 40% interest in the common shares of Laurier in Year 3 at a cost of $843,000 and uses the cost method to ac
The changes to acquisition differential schedule pertaining to Kent’s 40% interest showed the following write-off for Year 9:

Buildings $ 18,000
Goodwill impairment loss 22,000
40,000
Long-term liabilities 21,500
Total write-off —Year 9 $ 18,500

Depreciation expense and goodwill impairment loss are included with selling and administrative expenses.
In Year 9, rent amounting to $30,000 was paid by Laurier to Kent. Kent has recorded this as other in
In Year 6, Kent sold land to Laurier and recorded a profit of $93,000 on the transaction.
During Year 9, Laurier sold 30% of the land to an unrelated land development company.
During Year 9, Laurier paid dividends totalling $107,000.00
It has been established that Kent’s 40% interest would not be considered control in accordance with IFRS.
Assume a tax rate. 40%

Required:
(a) Assume that Laurier is a joint venture that is owned by Kent and two other unrelated venturers. Also assume that Kent acq
 Kent Corp.
Income Statement
for the Year Ended December 31, Year 9
Sales 3,180,000
Other income $175,200.00
Investment income (Note 1) 130,596
3,485,796

Cost of sales 1,445,000

Selling and administrative expenses 518,000
Other expenses 109,000
Income tax 418,000
2,490,000
Net income 995,796

Note 1:
Investment income
Laurier's income 356,000
Kent's percentage 40%
142400
less : Changes to acquisition differential 18,500
123,900

Realized gain on sale of land - Kent selling $6,696

130,596

(b) Assume that Laurier is a joint operation. Prepare Kent’s income statement for Year 9 using proportionately adjusted financ

Kent Corp.
Consolidated Income Statement
for the Year Ended December 31, Year 9
Sales 3732000
Other income $198,400.00
Gain on sale of land $58,360.0
Total 3988760
Cost of sales 1687000
Selling & admin expenses 685200
Other expenses $131,100.0
Income tax $489,664.0
Total 2992964
Net income 995796

Calculation of consolidated net income Year 9

Net income, Kent 908,000

Less; dividends $  $42,800.00
less: acquisition differential 18,500 61300
add realized land gain 846,700
$6,696
853,396
Net income, Laurier 356,000
Kent's share 40% 142400
Consolidated net income 995,796
es the cost method to account for its investment for internal record keeping.
ng write-off for Year 9:

recorded this as other income.

opment company.

so assume that Kent acquired its interest after Laurier’s initial formation, and that the acquisition differentials are therefore valid. Prepare
 $6,696

tionately adjusted financial statements.  (Input all amounts as positive values. Omit $ sign in your response.)
Intercompany proits before tax tax 40% after tax
land- kent selling in Year 6 $93,000
considered realized 60%
$55,800
considered unrealized year 6 40%
$37,200
realzied in Year 9 (30%) $11,160.0 $4,464.0 $6,696.0
unrealzied at end of year 9(70%) $26,040.0 $10,416.0 $15,624.0
ls are therefore valid. Prepare the income statement of Kent for Year 9 using the equity method.  (Input all amounts as positive values. Om
amounts as positive values. Omit $ sign in your response.)