On December 31,20X2,Bates Ltd.purchased 75% of the outstanding common shares of Ted Ltd.for $1,050,000 in cash.The balance sheets of Bates and Ted immediately before the acquisition were as follows (in 000s) :
At the time of acquisition,Ted's capital assets still had a remaining useful life
Of ten years.What is the amount of the adjustment to the net book value of capital assets on the consolidated statement of financial position at December 31,20X2 under the parent-company approach?
Definitions:
Allowance
In accounting, a reduction from the gross amount of receivables to reflect the estimated uncollectible amounts; in budgeting, an allocated amount for specific expenses.
Doubtful Accounts
Accounts receivable that a company does not expect to collect in full, often leading to an allowance for doubtful accounts as a contra asset on the balance sheet.
Allowance Method
An accounting technique used to manage accounts receivable and bad debt expense by estimating uncollectible accounts at the end of each period.
Net Income
The total revenue of a business minus total expenses, representing the profit made during a specific period.
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