On 1 July 2020, Sugar Ltd acquired 89% of the shares of Glider Ltd for $690,000. At this date, the equity ofGlider Ltd consisted of;Share Capital: $350,000Retained earnings: $125,000General reserve: $100,000all the identifiable assets and liabilities of Glider Ltd were recorded at amounts equal to fair value exceptfor;Fair ValueCarrying Amount55,000Patent70,000Inventory40,00060,000The tax rate is 30%. partial goodwill method is in use.Required:1. Acquisition analysis at 1 July 20202. Business combination valuation entries at 1 July 20203. Pre-acquisition entries at 1 July 20204. NCI share of equity at acquisition date 1 July 2020

Journal entry: A journal entry is used to record day-to-day transactions of the business by…

On 1 July 2020, Sugar Ltd acquired 89% of the shares of Glider Ltd for $690,000. At this date, the equity of Glider Ltd consisted of; Share Capital: $350,000 Retained earnings: $125,000 General reserve: $100,000 all the identifiable assets and liabilities of Glider Ltd were recorded at amounts equal to fair value except for; Carrying Amount Fair Value Patent 55,000 70,000 Inventory 40,000 60,000 The tax rate is 30%. partial goodwill method is in use. Required: 1. Acquisition analysis at 1 July 2020 2. Business combination valuation entries at 1 July 2020 3. Pre-acquisition entries at 1 July 2020

On 1 July 2020, Sugar Ltd acquired 89% of the shares of Glider Ltd for $690,000. At this date, the equity of Glider Ltd consisted of; Share Capital: $350,000 Retained earnings: $125,000 General reserve: $100,000 all the identifiable assets and liabilities of Glider Ltd were recorded at amounts equal to fair value except for; Carrying Amount Fair Value Patent 55,000 70,000 Inventory 40,000 60,000 The tax rate is 30%. partial goodwill method is in use. Required: 1. Acquisition analysis at 1 July 2020 2. Business combination valuation entries at 1 July 2020 3. Pre-acquisition entries at 1 July 2020

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On 1 July 2020, Kent Ltd acquired all the share capital (Ex-dividend) of Sub Ltd for $500,000. The financial statements of Kent Ltd showed the equity of Sub Ltd at that date to be: Share capital — 60 000 $5 shares $300 000 General reserve 40 000 Retained earnings 90 000 All the assets and liabilities of Sub Ltd were recorded at amounts equal to their fair values at that date except the following: Carrying Amount Fair value Land $150 000 $170 000 Plant (Cost $400 000) $300 000 $350 000 Inventory $75 000 $80 000 Additional information: On 10 September 2020, Sub Ltd paid interim cash dividend of $10,000. At acquisition date, 1 July 2020, Sub Ltd has an unrecorded Patent that has a fair value of $20,000, and a Contingent Liability that has a fair value of $15 000. Plant has expected to have a further 5-year life. The tax rate…
On 1 July 2019, SydMel Ltd acquired 80% of the issued shares of Sydney Ltd for $165 000. At this date, the equity of Lee Ltd was: Share capital $100 000 General reserve 40 000 Retained earnings 50 000 At acquisition date all the identifiable assets and liabilities of Sydney Ltd were recorded at amounts equal to fair value. At 30 June 2021, the equity of Sydney Ltd consisted of: Share capital $100 000 General reserve 50 000 Retained earnings 80 000 During the 2020–21-year Sydney Ltd recorded a profit of $15 000. Required: Prepare the consolidated worksheet entries at 30 June 2021 for SydMel Ltd assuming: At 1 July 2019, the fair value of the non-controlling interest was $39 000 and SydMel Ltd adopts the full goodwill method. SydMel Ltd adopts the partial goodwill method.
On 1 July 2021, James Ltd acquired all the issued shares of Dean Ltd for $350,000. At this date, the financial statements of Dean Ltd showed the following: $ Share capital 270,000 Retained earnings 26,500 General Reserve 8,800 Total equity 305,300 Goodwill 25,000 At acquisition date, all the net identifiable assets and liabilities in Dean Ltd were recorded at amounts equal to their fair value except for: Asset Carrying amount ($) Fair Value ($) Inventories 15,000 18,000 Plant (cost $400,000) 210,000 220,000 The Plant was calculated to have a further life of 5 years, and was depreciated on a straight-line basis. All inventory was sold by 30 June 2020. Assume 30% tax rate Required: Prepare the acquisition analysis at 1 July 2021. Prepare the consolidation entries at acquisition date, 1 July 2021. Include narrations for each entry. Prepare the consolidation worksheet as at 1 July 2021. Prepare a Balance sheet for the reporting Group, James Ltd as at 1 July 2021 in narrative format.
Unicorn Ltd acquired 80% of the issued shares of Pegasus Ltd for $685,700 on 1 July 2020. The financial statements of Pegasus Ltd showed the following items of equity: Share capital $565,500 Retained earnings $247,400 At acquisition date all the identificable assets and liabilities of Pegasus Ltd were recorded at amounts equal to fair value except for the following: Carrying amount Fair value Land $395,900 $424,100 During the year end 30 June 2021, Pegasus Ltd recorded at profit of $84,800. The tax rate is 30%. Required: Show the acquisition analysis as at 1 July 2020 and prepare the consolidated worksheet entries at 30 June 2021 for Unicorn Ltd assuming that it adopts the partial goodwill method.
On 1 July 2020 P Ltd purchased 100% of the issued capital of S Ltd for a purchase price of $859,000. At that date the shareholders’ equity of S Ltd disclosed: Share capital $121,000 General reserve $50,000 Retained earnings $260,000 Additional information: At the date of acquisition, all net identifiable assets of Sub Ltd were recorded at fair value Sales by S to P Ltd were $67,000. P Ltd sold inventory of $109,000 to S Ltd on 1 July 2021. The original cost of this inventory to P Ltd was $53,000. S Ltd has 47% of this inventory on hand at 30 June 2022 Company tax rate is 30% Requirements: Provide all consolidation journal entries (including workings) in next part of this question Compute the amount of 'realised profit' of the inventory transaction above in the form of 'cost of goods sold' and enter the amount in the answer space below Provide all your workings or journals in the answer space below.
On 1 July 2020 P Ltd purchased 100% of the issued capital of S Ltd for a purchase price of $859,000. At that date the shareholders’ equity of S Ltd disclosed: Share capital $121,000 General reserve $50,000 Retained earnings $260,000 Additional information: At the date of acquisition, all net identifiable assets of Sub Ltd were recorded at fair value Sales by S to P Ltd were $67,000. P Ltd sold inventory of $109,000 to S Ltd on 1 July 2021. The original cost of this inventory to P Ltd was $53,000. S Ltd has 47% of this inventory on hand at 30 June 2022 Company tax rate is 30% Requirements: Provide all consolidation journal entries (including workings) in next part of this question Compute the amount of 'realised profit' of the inventory transaction above in the form of 'cost of goods sold' and enter the amount in the answer space below
On 1 July 2019, Quick Buck Ltd took control of the assets and liabilities of Eldorado Ltd. Quick Buck Ltdissued 80,000 shares having a fair value of $2.40 per share in exchange for the net assets of EldoradoLtd. The costs of issuing the shares by Quick Buck Ltd cost $1,600.At this date the statement of financial position of Eldorado Ltd was as follows: c Carrying amount Fair valueMachinery $40,000 $67,000Fixtures & fittings 60,000 68,000Vehicles 35,000 35,000 Current assets 10,000 12,000Current liabilities (16,000) (18,000)Total net assets…
Madari Ltd purchased 100% of the shares of Concerto Ltd on 1 July 2020 for $70,000. On the date of acquisition, the equity of the two entities was as follows: Madari Ltd($) Concerto Ltd ($) General Reserve 25,000 5,500 Retained Earnings 4,500 3,300 Share Capital 60,000 38,000 At 1 July 2020, all of the identifiable assets and liabilities of Concerto Ltd were recorded at fair value except for the following: Carrying Amount ($) Fair Value ($) Inventory 3,000 4,500 Plant and Equipment 60,000 65,000 The plant and equipment had a further 5-year useful life. Any valuation adjustments are made on…
Madari Ltd purchased 100% of the shares of Concerto Ltd on 1 July 2020 for $70,000. On the date of acquisition, the equity of the two entities was as follows: Madari Ltd($) Concerto Ltd ($) General Reserve 25,000 5,500 Retained Earnings 4,500 3,300 Share Capital 60,000 38,000 At 1 July 2020, all of the identifiable assets and liabilities of Concerto Ltd were recorded at fair value except for the following: Carrying Amount ($) Fair Value ($) Inventory 3,000 4,500 Plant and Equipment 60,000 65,000 The plant and equipment had a further 5-year useful life. Any valuation adjustments are made on…
On 1 July 2019, Quick Buck Ltd took control of the assets and liabilities of Eldorado Ltd. Quick Buck Ltd issued 80,000 shares having a fair value of $2.40 per share in exchange for the net assets of Eldorado Ltd. The costs of issuing the shares by Quick Buck Ltd cost $1,600. At this date the statement of financial position of Eldorado Ltd was as follows: Carrying amount Fair value Machinery $40,000 S67,000 Fixtures & fittings 60,000 68,000 Vehicles 35,000 35,000 Current assets 10,000 12,000 Current liabilities (16,000) (18,000) Total net assets S129,000 Share capital (80,000 shares at $1.00 per share) $80,000 General reserve 20,000 Retained earnings 29,000 Total equity $129,000 Required: Prepare the journal entries in the records of Quick Buck Ltd at 1 July 2019 for the acquisition.
On 1 July 2019, Brad Ltd acquired all of the assets and liabilities of Pitt Ltd. In exchange for these assets and liabilities, Brad Ltd issued 100 000 shares that at date of issue had a fair value of $5.20 per share. Costs of issuing these shares amounted to $1000. Legal costs associated with the acquisition of Pitt Ltd amounted to $1200. The asset and liabilities of Pitt Ltd at 1 July 2019 were as follows: Carrying amount Fair value Assets $ 2000 10000 64 000 320 000 $ 2000 10000 Cash Accounts receivable 68 000 232 000 Inventories Equipment Accumulated depreciation – equipment (96 000) 240 000 Patents 280 000 Liabilities (16 000) (64 000) Accounts payable (16000) (64 000) Debentures Required (a) Prepare the acquisition analysis at 1 July 2019 for the acquisition of Pitt Ltd by Brad Ltd.
On 1 July 2019, Christina Ltd acquired all the issued shares of Adeline Ltd, paying $120 000 cash and transferring 100 000 of its own shares to Adeline Ltd’s former shareholders. At that date, the financial statements of Adeline Ltd showed the following information. Share Capital $100000 General Reserve 50000 Retained Earnings 150000 All the assets and liabilities of Adeline Ltd were recorded at amounts equal to their fair values at the acquisition date. The fair value of Christina Ltd’s shares at acquisition date was $2 per share. Christina Ltd incurred $30 000 in acquisition‐related costs that included $5000 as share issue costs. Required Prepare the acquisition analysis at 1 July 2019. Prepare the journal entries for Christina Ltd to recognise the investment in Adeline Ltd at 1 July 2019. Prepare the consolidation worksheet entries for…