Prawn Corporation Owns 80 Percent of the Outstanding Voting Shares

question 19

Essay

Prawn Corporation owns 80 percent of the outstanding voting shares of Shrimp Corporation,having acquired its interest January 1,20X3 for $100,000.At the time of the acquisition,Shrimp Corporation had a shareholder's equity totalling $150,made up for retained earnings of $30,000 and common shares of $20,000.The following accounts had fair values higher (or lower)than it's carrying values:
The equipment had a remaining useful life at the time of acquisition of five years.
The company uses the entity approach to determine the amount of goodwill.

Additional Information:
1.Shrimp had reported $50,000,relating to land (40%)and building (60%)sold to Prawn on January 3,20X5.These separate properties had not been owned on January 1,20X3.Remaining useful life was expected to be 10 years at that time.
2.Shrimp sold other land to a non-related company at a gain of $20,000 on June 30,20X6.
3.Intercompany sales and inventory data for 20X5 and 20X6:
Profit margins on sales by Prawn to Shrimp are 40%.
Profit margins on sales by Shrimp to Prawn are at 30%.
Required:
Prepare a complete consolidated Statement of Comprehensive Income for the year ending December 31,20X6.

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