Mami SA contributes $170 000 cash and Nasrin Company brings in net assets

CASE SEVENA Mami SA contributes $170 000 cash and Nasrin Company brings in net assets valued at $170 000 to form Mazda Inc. Mami SA and Nasrin Company each receive 50 percent equity interest in Mazda Inc. The financial statements of Mazda Inc. for its first year of operations are as follows: Mazda Inc. Income Statement YEAR 1 ______________________________________________________________________________ Revenues $80 000 Expenses 50 000 ________ Income before tax 30 000 Tax Expense 10 000 ________ Net Income $20 000 ________ Mazda Inc. Balance Sheet December 31 Year 1 ______________________________________________________________________________ Cash $40 000 Liabilities $60 000 Inventory 60 000 Property Plant and Common Stock 340 000 Equipment (net) 320 000 Retained Earnings 20 000 _________ ________ Total Assets $420 000 $420 000 _________ ________ Mami SA’s financial statements for the year ended December 31 Year 1 and before making any accounting entries related to its investment in Mazda Inc. are as follows: Mami SA Income Statement for Year 1 ______________________________________________________________________________ Revenues $800 000 Expenses 450 000 _________ Income before tax 350 000 Tax Expense 100 000 _________ Net Income $250 000 _________ Mami SA Balance Sheet for the year ended on December 31 Year 1 ______________________________________________________________________________ Cash $130 000 Liabilities $250 000 Inventory 200 000 Property Plant and Common Stock 600 000 Equipment (net) 650 000 Retained Earnings 300 000 Investment in Mazda Inc. (at cost) 170 000 ___________ __________ Total Assets $1 150 000 $1 150 000 ___________ __________ Restate Mami SA’s Year 1 financial statements to properly account for its investment in Mazda Inc. under the proportionate consolidation method and equity method. CASE SEVEN-B Marzi AG had the following investments in shares of other companies on December 31 Year 1: COMPANY STATUS % VOTING RIGHTS COMMENTS Elena Domestic 100% Operations differ from those of Marzi AG and other subsidiaries Barbara Domestic 45% No other shareholder owns more than 0.1% of the voting rights Arina Foreign 30% Arina has incurred a net operating loss three years in a row Sophia Domestic 100% Sophia is under jurisdiction of bankruptcy court Kristen Domestic 100% Operations are immaterial to those of Marzi AG Layla Domestic 40% Management control contract providesMarzi AG with effective control Sara Domestic 90% Marzi AG intends to sell one-half of its investment in Sara but not yet actively seeking a buyer Sahar Foreign 50% Sahar is jointly owned with another company Sepeed Foreign 15% No other shareholder owns more than 10% of the voting shares Shaghi Foreign 70% Marzi AG can no longer bring home its dividends due to the host government passed a ban on repatriation of dividends Elizabeth Domestic 51% Remaining 49% is owned by another company. Determine the appropriate method for including each of these investments in Marzi AG’s consolidate financial statements in accordance with: a) IFRS b) U.S. GAAP