Additional facts: The revaluation on 31 Dec 2021 shows $90,000 fair value. However, the tax authority does not allow revaluations; tax base remains original cost less wear and tear (tax depreciation: 10% per year reducing balance). Corporate tax rate is 30%. The company has a policy of transferring excess depreciation from revaluation surplus to retained earnings each year.
Required:
Nothing strikes fear into accounting students like consolidation. Graded questions start simple (parent plus 100% subsidiary) and escalate to complex structures with: Gripping Gaap Graded Questions And Solutions
Graded solution insight: The best solutions don't just show the consolidated totals; they walk through the analysis of equity and the calculation of goodwill line by line. Additional facts: The revaluation on 31 Dec 2021
Solutions in gripping GAAP are distinctive because they are self-correcting educational tools. A poor solution simply says "$10,000 (see working 3)." A gripping GAAP solution says: Graded solution insight: The best solutions don't just
"Working 3: Calculation of closing inventory. Under IAS 2, you must use the lower of cost and net realizable value (NRV). Here, cost was $50/unit, but NRV fell to $45/unit due to damage. Many students wrongly keep cost – that is a grading trap. The correct write-down is $5/unit × 1,000 units = $5,000 expense. See paragraph IAS 2.28."
This explanatory depth turns every solution into a micro-lesson.