The Following Balance Sheets Have Been Prepared on December 31

question 11

Essay

The following balance sheets have been prepared on December 31, 2016 for Clarke Corp. and Jensen Inc.
Balance Sheets
Additional Information:
Clarke uses the cost method to account for its 50% interest in Jensen, which it acquired on January 1, 2013. On that date, Jensen's retained earnings were $20,000. The acquisition differential was fully amortized by the end of 2016.
Clarke sold Land to Jensen during 2015 and recorded a $15,000 gain on the sale. Clarke is still using this Land. Clarke's December 31, 2016 inventory contained a profit of $10,000 recorded by Jensen.
Jensen borrowed $20,000 from Clarke during 2016 interest-free. Jensen has not yet repaid any of its debt to Clarke.
Both companies are subject to a tax rate of 20%.
$\begin{array}{|l|l|l|} \hline& \text { Clarke } & \text { Jensen } \\\hline & & \\\hline \text { Cash } & \$ 30,000 & \$ 20,000 \\\hline \text { Imwentory } & \$ 70,000 & \$ 30,000 \\\hline\\\hline \text { Accounts Receivable } & \$ 180,000 & \$ 70,000 \\\hline \text { Imvestment in Jensen } & \$ 200,000 & \\\hline \text { Fixed Assets } & \$ 500,000 & \$ 90,000 \\\hline \text { Accumulated Depreciation } & \$ 280,000) & (\$ 30,000) \\\hline \text { Total Assets } & \$ 700,000 & \$ \mathbf{1 8 0 , 0 0 0} \\\hline \text { Current Liabilities } & \$ 120,000 & \$ 60,000 \\\hline \text { Long-Term Debt } & \$ 400,000 & \$ 20,000 \\\hline \text { Common Shares } & \$ 90,000 & \$ 40,000 \\\hline \text { Retained Earnings } & \$ 90,000 & \$ 60,000 \\\hline \text { Liabifities and Equity } & \$ 700,000 & \$ 180,000 \\\hline\end{array}$
-Prepare a Balance Sheet for Clarke on December 31, 2016 in accordance with current Canadian GAAP, assuming that Clarke's investment in Jensen is a significant influence investment and is reported using the equity method.

---

Definitions:

Klinefelter Syndrome

A genetic condition in males resulting from an extra X chromosome, characterized by physical, developmental, and sometimes reproductive differences.

Turner Syndrome

A chromosomal disorder affecting females, characterized by the partial or complete absence of an X chromosome.

Genetic Disorder

A disease or condition caused by an abnormality in an individual's DNA, which can be inherited from one's parents or result from a mutation.

Extra X Chromosome

Having an extra X chromosome refers to a genetic condition where an individual, typically male, has an additional X chromosome, leading to symptoms associated with Klinefelter syndrome.