Reference no: EM13333413

Problem

Income Statements

Year Ended December 31, 20X8

	Insure Co.	Go-med Co.
Sales	$3,900,000	$1,560,000
Other income	260,000	91,000
Gain on sale of land	___-___	130,000
	4,160,000	1,781,000
Cost of sales	1,820,000	728,000
Operating expenses	780,000	559,000
Income tax	520,000	195,000
	3,120,000	1,482,000
Net income	$1,040,000	$  299,000

Insure acquired 40% of the common shares of Go-med in 20X2 for $1,072,500.

For 20X8, Insure amortized its acquisition differential as follows:

  Buildings                $ 11,700

  Long-term liabilities         (16,250)

  Goodwill impairment loss     16,900

  $ 12,350

During 20X8, Go-med paid royalties of $162,500 to Insure, which Insure included in its other income.

During 20X8, Go-med sold land to a third party. It had acquired the land 3 years ago from Insure. At that time, Insure had recorded a profit on the sale of $29,250.

During 20X8, Go-med declared and paid dividends of $104,000.

Both Insure and Go-med pay taxes at an average rate of 40%.

Required:

Assume that Go-med is a joint venture owned by Insure and four other venturers, that the acquisition differentials are valid, and that it has not yet adopted IFRS 11: Joint Arrangements. Prepare a 20X8 consolidated income statement for Insure using proportionate consolidation.