1. Homework 2 due November 7, 2018 10 am
Questions about Wales
Why are Cardiff’s net assets higher by $500 at date of acquisition then at year-end decreased by $25?
What is the amount of provision for unrealized profits? Who is doing the buying?
Why is it deducted from the subsidiary’s year end profits?
Why do we deduct depreciation from the subsidiary’s profits at year end and not at the date of acquisition?

2. Homework continued Why is the differed consideration discounted?
What is the amount of the post acquisition profits and why does it not go 100% to Wales?
Why is it necessary to unwind the differed consideration? Where are the numbers accounted in the Group Wales?
Why is the impairment loss split between Wales and Cardiff?
Why are Wales profits reduced by $75 in Group retained earnings?
Why do we create W5’?