Reporting of Equity in Consolidation Paris Cosmetics purchased all of the of the ordinary shares of...

Reporting of Equity in Consolidation Paris Cosmetics purchased all of the of the ordinary shares of All Mineral Company for Cash on January 1, 2019. The separate balance sheets of the two corporations before consolidation appeared as follows (not necessarily in order):

During purchase negotiations, Paris Cosmetics determined the appraised value of All Minerals Patents were €20,000 and their inventory was 19,500; and all of the remaining assets and liabilities were appraised at values approximating their book values.

	Paris Cosmetics	All Minerals	Consolidating Adjustments	Consolidated
Investment in All Minerals	700,000	------
PPE, net	1,150,000	500,000
Inventory	740,000	21,500
Accounts Payable	400,000	125,000
Share Capital-- Ordinary	1,400,000	300,000
Accounts Receivable	165,000	95,000
Patents	20,000	15,000
Cash	?	?
Note Payable	500,000	35,000
Goodwill	------	-----
Retained earnings	600,000	240,000

During purchase negotiations, Paris Cosmetics determined the appraised value of All Minerals Patents were €20,000 and their inventory was 19,500; and all of the remaining assets and liabilities were appraised at values approximating their book values.

Determine how much will be ascribed to goodwill? (Hint: What is the definition of goodwill?) (5 points)
Prepare the consolidated Balance Sheet. Use the EU version of IFRS. Order is important. (10 points)
Prepare journal entry to record transactions

Expert Solution

Consolidated Balance Sheet
Particulars	Paris Cosmetics	All Minerals	Consolidating Adjustments	Consolidated
Assets
Investment in All Minerals	700000		-700000	0
PPE, net	1150000	500000	0	1650000
Inventory	740000	21500	-2000	759500
Goodwill			157000	157000
Accounts Receivable	165000	95000	0	260000
Patents	20000	15000	5000	40000
Cash	125000	68500	0	193500
Total Assets	2900000	700000	-540000	3060000

Liabilities
Note Payable	500000	35000	0	535000
Accounts Payable	400000	125000	0	525000
Retained earnings	600000	240000	-240000	600000
Share Capital-- Ordinary	1400000	300000	-300000	1400000
Total Liabilities	2900000	700000	-540000	3060000

Note: Cash is balancing figure

Calculation of Goodwill

Add:
PPE, net		500000
Inventory		19500
Accounts Receivable		95000
Patents		20000
Cash		68500
Less:
Note Payable		-35000
Accounts Payable		-125000
Net Worth (A)		543000

Consideration Paid (B)		700000

Goodwill (B-A)		157000

ekkarill92 answered 5 months ago

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