The Trial Balances of Ash Inc Other Information:
Ash Acquired Cinder in Three Stages

question 24

Essay

The trial balances of Ash Inc. and its subsidiary Cinder Corp. on December 31, 2020 are shown below:
$\begin{array}{|l|r|r|}\hline & \text { Ash } & \text { Cinder } \\\hline \text { Inventory } & \$ 160,000 & \$ 100,000 \\\hline \text { Plant and Equipment (net) } & \$ 2,700,000 & \$ 700,000 \\\hline \text { Dividends Declared } & \$ 200,000 & \$ 100,000 \\\hline \text { Investment in Cinder } & \$ 700,000 & \\\hline \text { Cost of Goods Sold } & \$ 650,000 & \$ 90,000 \\\hline \text { Other Expenses } & \$ 50,000 & \$ 10,000 \\\hline \text { Total Assets } & \$ 4,460,000 & \$ 1,000,000 \\\hline \text { Liabilities } & \$ 1,000,000 & \$ 150,000 \\\hline \text { Common Shares } & \$ 1,660,000 & \$ 600,000 \\\hline \text { Retained Earnings } & \$ 600,000 & \$ 100,000 \\\hline \text { Sales and Other Revenue } & \$ 1,200,000 & \$ 150,000 \\\hline \text { Total Liabilities and Equity } & \$ 4,460,000 & \$ 1,000,000\\\hline\end{array}$ Other Information:
Ash acquired Cinder in three stages:
$\begin{array} { |l|l| }\hline \text { january 1, 2017:}& \begin{array} { l } \text { Ash purchased 10,000 shares for \( \$ 100,000 \). Cinder's } \\ \text { Retained Earnings were \( \$ 40,000 \) on that date. The } \\ \text {investment is classified as fair value through profit or loss } \\ \text {(FVTPL). } \\\end{array}\\\hline \text {january 1, 2019: } &\begin{array} { l } \text { Ash purchased 30,000 shares for \( \$ 450,000 \). Cinder's } \\ \text {Retained Earnings were \( \$ 80,000 \) on that date. Ash } \\ \text {has obtained significant influence in the key decisions for } \\ \text {Cinder. } \\\end{array}\\\hline \text {December 31,2020: } &\begin{array} { l } \text {Ash purchased 20,000 shares for \( \$ 150,000 \). Cinder's } \\ \text { Retained Earnings were \( \$ 100,000 \) on that date. Ash } \\ \text { now owns \( 60 \% \) and has control over Cinder.} \\\end{array}\\\hline \end{array}$
Cinder was incorporated on January 1, 2015. On that date, Cinder issued 100,000 voting shares.
Any difference between the cost and book value is attributable entirely to trademarks, which are to be amortized over 5 years. The company has neither issued nor retired shares since the date of its incorporation.
Ash sold depreciable assets to Cinder at a loss of $20,000 on January 1, 2019. These assets had a 10 year remaining life.
Intercompany sales of inventory during 2020 amounted to $250,000. Unrealized inventory profits for each company are shown below for 2020. The amounts indicate the amount of profit in each company's inventory.
$\begin{array}{|c|c|}\hline \text { Ash } & \\\hline \text { January } 1,2020: & \$ 10,000 \\\hline \text { December } 31,2020: & \$ 20,000 \\\hline \text { Cinder } & \\\hline \text { January } 1,2020: & \$ 20,000 \\\hline \text { December } 31,2020: & \$ 40,000 \\\hline\end{array}$ All inventories on hand at the start of 2020 were sold to outsiders during the year. The net incomes of both companies are evenly earned throughout the year. Both companies are subject to an effective corporate tax rate of 20%.
What amount will be shown in the consolidated balance sheet of Ash as at December 31, 2020, for trademarks?

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Definitions:

Ventricular Filling

The phase of the cardiac cycle when the heart's ventricles fill with blood coming from the atria.

Diastole

The moment in the heartbeat cycle when the heart's muscle eases and the chambers are enabled to draw in blood.

AV Valves

The atrioventricular valves, which are located between the atria and ventricles of the heart and regulate blood flow.

Systolic Pressure

The maximum arterial pressure during contraction of the heart's left ventricle.