Reporting of Equity in Consolidation Paris Cosmetics purchasedall of the of the ordinary shares of All Mineral Company for Cashon January 1, 2019. The separate balance sheets of the twocorporations before consolidation appeared as follows (notnecessarily in order):
During purchase negotiations, Paris Cosmetics determined theappraised value of All Minerals Patents were €20,000 and theirinventory was 19,500; and all of the remaining assets andliabilities were appraised at values approximating their bookvalues.
| 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 theappraised value of All Minerals Patents were €20,000 and theirinventory was 19,500; and all of the remaining assets andliabilities were appraised at values approximating their bookvalues.
- Determine how much will be ascribed to goodwill? (Hint: What isthe definition of goodwill?) (5 points)
- Prepare the consolidated Balance Sheet. Use the EU version ofIFRS. Order is important. (10 points)
- Prepare journal entry to record transactions
