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Income Statements PORE Inc. SCORE Inc. Sales $1,110,000 $530,000 Other Revenues $400,000 $160,000 Less: Expenses: Cost of Goods Sold: $800,000 $330,000 Depreciation Expense $30,000 $20,000 Other Expenses $110,000 $150,000 Income Tax Expense $170,000 $50,000 Net Income $400,000 $140,000 Retained Earnings Statements Balance, Jan 1, 2019 $1,020,000 $760,000 Net Income $400,000 $140,000 Less: Dividends ($260,000) ($100,000) Retained Earnings $1,160,000 $800,000 Balance Sheets PORE Inc. SCORE Inc. Cash $300,000 $240,000 Accounts Receivable 300,000 395,000 Inventory 250,000 175,000 Investment in SCORE Inc. 900,000 Land 80,000 70,000 Equipment (net) 220,000 210,000 Total Assets $2,050,000 $1,090,000 $90,000 Current Liabilities Bonds Payable Common Shares Retained Earnings $270,000 220,000 400,000 1,160,000 200,000 800,000 Total Liabilities and Equity $2,050,000 $1,090,000 PORE Inc. SCORE Inc. Cash $300,000 $240,000 Accounts Receivable 300,000 395,000 Inventory 250,000 175,000 Investment in SCORE Inc. 900,000 Land 80,000 70,000 Equipment (net) 220,000 210,000 Total Assets $2,050,000 $1,090,000 $90,000 Current Liabilities $270,000 Bonds Payable 220,000 Common Shares 400,000 Retained Earnings 1,160,000 200,000 800,000 Total Liabilities and Equity $2,050,000 $1,090,000 Other Information: 1. On Jan 2, 2016, SCORE purchased equipment for $70,000 and estimated its useful life would be 7 years with no salvage value. On Jan 1, 2019, SCORE sold the equipment to PORE for $80,000. Both companies use straight line depreciation. 2. During 2018, PORE sold a parcel of land to SCORE for $95,000. PORE had purchased this land in 2016 for $80,000. Score still has the land and uses as a warehouse space. 3. During 2019, PORE charged SCORE $15,000 of management fees. SCORE paid $10,000 during the year and expects to pay the remaining $5,000 in 2020. 4. During December 2019, PORE sold inventory to SCORE for $80,000, the cost of the inventory to PORE was $60,000. 40% of these goods remained in SCORE's inventory at the end of 2019. 5. During December 2018, SCORE sold inventory to PORE for $60,000, the cost of the inventory to SCORE was $30,000. 10% of these goods remained in PORE's inventory at the end of 2018. PORE eventually sold the entire inventory to an outside customer in 2019. 6. A goodwill impairment test conducted during December of 2017 revealed a loss of $50,000 and Dec of 2019 another loss of 35,000. REQUIRED: a) Prepare a schedule showing the calculation of goodwill at the date of acquisition of SCORE under the fair value enterprise method, and an acquisition differential amortization schedule. b) Prepare a schedule showing the inter-company realized and unrealized profits. Your schedule should include both pre-tax and after-tax amounts. c) Prepare the consolidated financial statements under the fair value enterprise method: Income statement and Retained Earnings for the year ended December 31", 2019, and Balance Sheet as at December 31", 2019. Show all supporting calculations. NOTE: In preparing Consolidated Statement of Retained Earnings you need to calculate the opening retained earnings. Don't forget to show all your calculations. Income Statements PORE Inc. SCORE Inc. Sales $1,110,000 $530,000 Other Revenues $400,000 $160,000 Less: Expenses: Cost of Goods Sold: $800,000 $330,000 Depreciation Expense $30,000 $20,000 Other Expenses $110,000 $150,000 Income Tax Expense $170,000 $50,000 Net Income $400,000 $140,000 Retained Earnings Statements Balance, Jan 1, 2019 $1,020,000 $760,000 Net Income $400,000 $140,000 Less: Dividends ($260,000) ($100,000) Retained Earnings $1,160,000 $800,000 Balance Sheets PORE Inc. SCORE Inc. Cash $300,000 $240,000 Accounts Receivable 300,000 395,000 Inventory 250,000 175,000 Investment in SCORE Inc. 900,000 Land 80,000 70,000 Equipment (net) 220,000 210,000 Total Assets $2,050,000 $1,090,000 $90,000 Current Liabilities Bonds Payable Common Shares Retained Earnings $270,000 220,000 400,000 1,160,000 200,000 800,000 Total Liabilities and Equity $2,050,000 $1,090,000 PORE Inc. SCORE Inc. Cash $300,000 $240,000 Accounts Receivable 300,000 395,000 Inventory 250,000 175,000 Investment in SCORE Inc. 900,000 Land 80,000 70,000 Equipment (net) 220,000 210,000 Total Assets $2,050,000 $1,090,000 $90,000 Current Liabilities $270,000 Bonds Payable 220,000 Common Shares 400,000 Retained Earnings 1,160,000 200,000 800,000 Total Liabilities and Equity $2,050,000 $1,090,000 Other Information: 1. On Jan 2, 2016, SCORE purchased equipment for $70,000 and estimated its useful life would be 7 years with no salvage value. On Jan 1, 2019, SCORE sold the equipment to PORE for $80,000. Both companies use straight line depreciation. 2. During 2018, PORE sold a parcel of land to SCORE for $95,000. PORE had purchased this land in 2016 for $80,000. Score still has the land and uses as a warehouse space. 3. During 2019, PORE charged SCORE $15,000 of management fees. SCORE paid $10,000 during the year and expects to pay the remaining $5,000 in 2020. 4. During December 2019, PORE sold inventory to SCORE for $80,000, the cost of the inventory to PORE was $60,000. 40% of these goods remained in SCORE's inventory at the end of 2019. 5. During December 2018, SCORE sold inventory to PORE for $60,000, the cost of the inventory to SCORE was $30,000. 10% of these goods remained in PORE's inventory at the end of 2018. PORE eventually sold the entire inventory to an outside customer in 2019. 6. A goodwill impairment test conducted during December of 2017 revealed a loss of $50,000 and Dec of 2019 another loss of 35,000. REQUIRED: a) Prepare a schedule showing the calculation of goodwill at the date of acquisition of SCORE under the fair value enterprise method, and an acquisition differential amortization schedule. b) Prepare a schedule showing the inter-company realized and unrealized profits. Your schedule should include both pre-tax and after-tax amounts. c) Prepare the consolidated financial statements under the fair value enterprise method: Income statement and Retained Earnings for the year ended December 31", 2019, and Balance Sheet as at December 31", 2019. Show all supporting calculations. NOTE: In preparing Consolidated Statement of Retained Earnings you need to calculate the opening retained earnings. Don't forget to show all your calculations

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