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Yin Inc. purchased 75% of the voting shares of Yang Inc for $500,000 on July 1, 2021. On that date, Yang Inc.s Common Stock and Retained Earnings were valued at $200,000 and $100,000 respectively. Unless otherwise stated, assume that Yin uses the cost method to account for its investment in Yang Inc.

Yangs fair values approximated its book values with the following exception:

Yangs bonds payable had a fair value which was $50,000 higher than their book value.

The bonds payable mature on July 1, 2031. Both companies use straight line amortization exclusively.

The Financial Statements of both companies for the Year ended June 30, 2022 are shown below:

Income Statements

Yin Inc. Yang Inc. Sales $500,000 $400,000 Other Revenues $100,000 $60,000 Less: Expenses: Cost of Goods Sold: $400,000 $320,000 Depreciation Expense $20,000 $10,000 Other Expenses $60,000 $30,000 Income Tax Expense $48,000 $40,000 Net Income $72,000 $60,000 Retained Earnings Statements Balance, July 1, 2021 $200,000 $240,000 Net Income $72,000 $60,000 Less: Dividends ($22,000) ($30,000) Retained Earnings $250,000 $270,000 Yin Inc. Yang Inc. Cash $150,000 $120,000 Accounts Receivable $350,000 $160,000 Inventory $200,000 $180,000 Investment in Yang Inc. $500,000 Land $40,000 Equipment (net) $360,000 $240,000 Total Assets $1,600,000 $700,000 Current Liabilities $600,000 $130,000 Bonds Payable $250,000 $100,000 Common Shares $500,000 $200,000 Retained Earnings $250,000 $270,000 Total Liabilities and Equity $1,600,000 $700,000

Income Statement	Yin	Yang
Sales	500,000	400,000
Other Revenues	100,000	60,000
Less Expenses
COGS	400,000	320,000
Depreciation	20,000	10,000
Other	60,000	30,000
Income tax	48,000	40,000
Net Income	72,000	60,000

Retained Earnings Statements	Yin	Yang
Balance, July 1 2021	200,000	240,000
Net Income	72,000	60,000
Less Dividends	(22,000)	(30,000)
Retained Earnings	250,000	270,000

	Yin	Yang
Cash	150,000	120,000
AR	350,000	160,000
Inventory	200,000	180,000
Investment in Yang	500,000	0
Land	40,000	0
Equipment (net)	360,000	240,000
Total Assets	1,600,000	720,000
Current Liabilities	600,000	130,000
Bonds Payable	250,000	100,000
Common Shares	500,000	200,000
Retained Earnings	250,000	270,000
Total L and SE	1,600,000	700,000

Other Information:

During August of 2022, Yin sold $60,000 worth of Inventory to Yang, 80% of which was sold to outsiders during the year. During October of 2023, Yin sold inventory to Yang for $90,000. two-thirds of this inventory was resold by Yang to outside parties later that year.

During September of 2022, Yang sold $90,000 worth of inventory to Yin, 50% of which was sold to outsiders during the year. During April of 2022, YAng sold inventory to Yin for $120,000. 80% of this inventory was resold by YAng to outside parties in May.

During May of 2022, Yang sold a lot of Land to Yin for $40,000. The land was recorded at Cost of $24,000 on Yang book prior to the sale. Yin has not yet sold the land.

All intercompany sales as well as sales to outsiders are priced 50% above cost. The effective tax rate for both companies is 40%.

Required:

1. Compute Yin Goodwill at the date of acquisition. The company uses the INA approach.

2 Prepare a schedule of realized and unrealized profits for the fiscal year ended June 30, 2022 for both companies. Show your figures before and after tax.

3. Prepare Yin Consolidated Income Statement for the Year ended June 30, 2022

4. Calculate the non-controlling interest (Balance Sheet) as at June 30, 2022.

5. Calculate Consolidated Retained Earnings as at June 30, 2022.

6. Assuming that Yin Inc uses the equity method, compute the balance in its investment in Yang account at June 30, 2022.

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