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On December 31, Year 1, P Company purchased 80% of the outstanding shares of S Company for $6,960 cash.

The statements of financial position of the two companies immediately after the acquisition transaction appear below.

	P Company			S Company
	Carrying Amount			Carrying Amount			Fair Value
Plant and equipment (net)	$	8,100		$	6,900		$	6,000
Investment in S Company		6,960
Inventory		5,160			3,750			3,900
Accounts receivable		3,150			1,800			1,800
Cash		1,500			1,050			1,050
	$	24,870		$	13,500
Ordinary shares	$	10,500		$	3,000
Retained earnings		8,370			6,000
Long-term liabilities		4,200			2,000			2,000
Other current liabilities		1,200			1,800			1,800
Accounts payable		600			700			700
	$	24,870		$	13,500

Required:

(a) Calculate consolidated goodwill at the date of acquisition under the proportionate consolidation method.

Consolidated goodwill $

(b) Prepare a consolidated statement of financial position in order of liquidity i.e starting with cash at the date of acquisition under each of the following:

(i) Identifiable net assets method

(ii) Fair value enterprise method

(c) Calculate the current ratio and debt-to-equity ratio for P Company under the identifiable net assets (INA) method and the fair value enterprise (FVE) method. (Round "Current ratio" answers to 2 decimal places and "Debt to equity ratio" answers to 4 decimal places.)

	INA		FVE
Current ratio
Debt to equity ratio

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