On 1 July 2019, Silver Ltd, a reporting entity, acquired all of the issued shares of Brumby Ltd. As part of the settlement, Silver Ltd agreed to pay $1,700,000 on 1 July 2019 and $1,284,000 payable on 1 July 2020. The appropriate discount rate was7% per annum. Silver Ltd also issued 475,000 shares of Silver Ltd to the shareholders of Brumby Ltd. At acquisition date, the fair value of the ordinary shares of Silver Ltd were $2.50 and the fair value of the ordinary shares of Brumby Ltd were $3.00.Brumby Ltd's shareholders' equity on 1 July 2019 consisted of the following:Issued capital$1,900,000Retained earnings$650,000Total shareholders' equity$ 2,550,000At 1 July 2019, all of Brumby Ltd's net assets were recorded at fair value, except the following items:Carrying AmountFair ValueMachinery$1,120,000$1,400,000Brumby Ltd purchased the plant for $1,500,000. On 1 July 2019, the plant had an estimated remaining useful life of 7 years with zero residual value. Brumby Ltd is depreciating the asset straight-line over its useful life.The directors of Silver Ltd believe that the goodwill relating to the acquisition of Brumby Ltd was impaired by $140,000 during the year ended 30 June 2020.Both Silver Ltd and Brumby Ltd use the cost model for the valuation of assets, so any fair value adjustments will be completed as consolidation adjustments.The company income tax rate is 30%In preparing the acquisition analysis, what is the amount for the fair value of identifiable net assets of Brumby Ltd?

Given: A consolidated financial statement will record the net identifiable assets of the subsidiary…

corded at fair value, except the following items: Fair Value $1,400,000 p. On 1 July 2019, the plant had an estimated remaining useful life of 7 years with zero residual value. Brumby Ltc dwill relating to the acquisition of Brumby Ltd was impaired by $140,000 during the year ended 30 June 2020. odel for the valuation of assets, so any fair value adjustments will be completed as consolidation adjustments. at je the amount for the fair value of identifiable net assots of Brumhy I td2

corded at fair value, except the following items: Fair Value $1,400,000 p. On 1 July 2019, the plant had an estimated remaining useful life of 7 years with zero residual value. Brumby Ltc dwill relating to the acquisition of Brumby Ltd was impaired by $140,000 during the year ended 30 June 2020. odel for the valuation of assets, so any fair value adjustments will be completed as consolidation adjustments. at je the amount for the fair value of identifiable net assots of Brumhy I td2

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Presented below is information related to equipment owned by Wildhorse Company at December 31, 2025.…

A: Impairment loss : when the carrying value of assets is lower than its recoverable value,it will be…

Q: In January 1, 2020, the following assets of Company A had the following corresponding values:…

A: he question involves the revaluation of machinery and equipment by Company A, which has decided to…

Q: ABC acquired 70% of EFG on June 30, 2021. Based on EFG's acquisition- date fair value on intangible…

A: The question is related to Consolidated Financial Statements. Required Compute for Consolidated…

Q: On January 1, 20x3, Frietas Corporation acquired all the assets and assumed all the liabilities of…

A: Goodwill is an intangible asset that represents the excess of the purchase price of a business over…

Q: Chili's, acquired Thallicious for $32,170,000. The fair value of all Thailicioustangible and…

A: Goodwill is the excess of consideration paid over the fair values of net assets of the acquiring…

Q: On 31 December 2023, the statement of financial position of Dominic Ltd showed the following…

A: Revaluation of AssetsRevaluation of assets refers to the process of assessing the fair market value…

Q: Impairment of a CGU ✰✰ Bow Ltd reported the following assets in its statement of financial position…

A: The first step is to calculate the carrying amount of the assets. The carrying amount is the…

Q: 1. Prepare any necessary journal entries associated with the three classes of assets for the year…

A: Hey there since you have posted multiple questions, we can answer only first question, please…

Q: On 30 June 2019, TIE Ltd acquired a machire for $180 000 cash, with an expected useful life of 9…

Q: The information that follows relates to equipment owned by Sweet Acacia Limited at December 31,…

A: Under ASPE undiscounted cash flows is used to determine the impairment process to determine the…

Q: In 2020, LRRR Corp., a calendar year corporation, acquired and placed in service the assets listed…

A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: As at 31 December 2020, Aura Plc has a development asset on its Statement of Financial Position of…

A: It is pertinent to note that as per IAS 38 ( Intangible asset ) costs that are incurred in order to…

Q: The information that follows relates to equipment owned by Buffalo Limited at December 31, 2023:…

A: Answer:- Depreciation is basically the recording of decline value of an asset due to wear and tear,…

Q: ss

A: The objective of the question is to compute the book value of the plant and equipment and patent at…

Question

On 1 July 2019, Silver Ltd, a reporting entity, acquired all of the issued shares of Brumby Ltd. As part of the settlement, Silver Ltd agreed to pay $1,700,000 on 1 July 2019 and $1,284,000 payable on 1 July 2020. The appropriate discount rate was
7% per annum. Silver Ltd also issued 475,000 shares of Silver Ltd to the shareholders of Brumby Ltd. At acquisition date, the fair value of the ordinary shares of Silver Ltd were $2.50 and the fair value of the ordinary shares of Brumby Ltd were $3.00.
Brumby Ltd's shareholders' equity on 1 July 2019 consisted of the following:
Issued capital
$1,900,000
Retained earnings
$650,000
Total shareholders' equity
$ 2,550,000
At 1 July 2019, all of Brumby Ltd's net assets were recorded at fair value, except the following items:
Carrying Amount
Fair Value
Machinery
$1,120,000
$1,400,000
Brumby Ltd purchased the plant for $1,500,000. On 1 July 2019, the plant had an estimated remaining useful life of 7 years with zero residual value. Brumby Ltd is depreciating the asset straight-line over its useful life.
The directors of Silver Ltd believe that the goodwill relating to the acquisition of Brumby Ltd was impaired by $140,000 during the year ended 30 June 2020.
Both Silver Ltd and Brumby Ltd use the cost model for the valuation of assets, so any fair value adjustments will be completed as consolidation adjustments.
The company income tax rate is 30%
In preparing the acquisition analysis, what is the amount for the fair value of identifiable net assets of Brumby Ltd?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Additional Information:a) On the date of acquisition, an item of equipment of Man United. Ltd with a carrying amountof GHS60 million had a fair value of GHS96 million and had remaining useful life of ten years from that date. This fair valuation has not been reflected in the financial statement of Man United Ltd.b) The inventory of Chelsea Ltd at 31 December 2019 included GHS 16 million worth of goods purchased from Man United at cost plus 25%c) Chelsea Ltd earned a profit after tax of GHS 18 million in 2019. No dividend was paid in the year.d) The loan stock in the books of Chelsea Ltd was acquired by Man United Ltd on 1 June 2019.e) Included in the Man United Ltd receivables is GHS 8 million relating to inventory sold to Chelsea Ltd since acquisition. Chelsea raised a cheque for GHS 5 million and sent it to Man United Ltd on 30 December 2019. Man United Ltd got value for the cheque 2 January 2020.f) It is the policy of the group to value NCI at acquisition using the proportion of net…
On January 2, 2019, Peace Co. acquired 80% of the outstanding common stock of Shade Co. for ₱1,344,000 with no goodwill resulting from the acquisition. The following selected account balances were taken from the accounting records of Shade Co. BV FV Building 12,000,000 12,400,000 Machinery 620,000 500,000 The building has an estimated useful life of 10 years and the equipment is expected to last for 5 years. For the year 2019, Peace Co. reported net income from own operations of ₱2,240,000 and Shade Co. reported ₱600,000 net income from own operations. Peace Co. accounts its investment in Shade Co. using the cost method. What is the consolidated income statement for the year 2019.
Presented below is information related to equipment owned by Swifty Company at December 31, 2020. Cost Accumulated depreciation to date Expected future net cash flows Fair value $6,370,000 750,000 5,100,000 3,630,000 Assume that Swifty will continue to use this asset in the future. As of December 31, 2020, the equipment has a remaining useful life of 4 years and no salvage value.
The amount of the impairment loss is: question attached in ss thanks asf as asg a
A fixed asset with a cost of $25,974 and accumulated depreciation of $23,377 is traded for a similar asset priced at $40,828 (fair market value) in a transaction with commercial substance. Assuming a trade-in allowance of $4,683, the cost basis of the new asset is Select the correct answer. $43,425 $38,742 $40,828 $36,145
Presented below is information related to Wolfie Corp.’s equipment on 12/31/2022: Description Amount Capitalized cost $900,000 Accumulated depreciation to date 750,000 Estimated residual value 40,000 Expected future cash flows 125,000 Estimated Fair value 100,000 The amount of the impairment loss, if any, that Wolfie Corp. should record on 12/31/22 is: $45,000 $50,000 $10,000 $20,000 $25,000 There is no impairment.
Brea plc, which has a financial year end of 31 December, has an item of plant which meets the criteria to be classified as held for sale at 1 July 20X9. The original cost of the asset was $120,000 with an estimated useful life of 10 years and, at 1 January 20X9, had accumulated depreciation of $36,000. At 1 July 20X9 the fair value of the plant is $50,000 with costs to sell estimated at $4,000. a) Show how this asset would be accounted for in the 20X9 financial statements. b) Suppose that the plant is still held for sale at 31 December 20X9, and, at this date, the fair value and estimated costs to sell are respectively: (i) $45,000 and $4,000. (ii) $55,000 and $5,000 For(i) and (ii) show how the changes in fair value less costs to sell would be accounted for in the books of accounts
Do not give answer in image
Robertson Company had purchased an equipment on January 1, 2019 for P 4,800,000. The entity used the straight-line method of depreciation based on a ten-year estimated useful life with no residual value. During 2022, the entity decided that the equipment would be used only three more years and then replaced with a technologically superior model. What entry should be made on January 1, 2022 to reflect the change? a. Debit other comprehensive income and credit accumulated depreciation, P 480,000. b. Debit depreciation and credit accumulated depreciation, P 560,000. c. Debit retained earnings and credit accumulated depreciation, P 480,000. d. No entry
The information that follows relates to equipment owned by Buffalo Limited at December 31, 2023: Cost Accumulated depreciation to date $4,320,000 480,000 Expected future net cash flows (undiscounted) 3,360,000 Expected future net cash flows (discounted, value in use) 3,048,000 Fair value 2,976,000 Costs to sell (costs of disposal) 24,000 Assume that Buffalo will continue to use this asset in the future. As at December 31, 2023, the equipment has a remaining useful life of four years. Buffalo uses the straight-line method of depreciation. Assume that Buffalo is a private company that follows ASPE. (a) (b) Prepare the journal entry to record depreciation expense for 2024. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. List debit entry before credit entry.) Date Account Titles and Explanation December 31, 2024 Debit Cre
Dont uplode image in answer At 1 July 2019 David Ltd acquired the following non-current assets: Machine A Machine B Machine C Cost 48,000 Cost 70,000 Cost 85,000 Useful Life 8 years Useful Life 8 years Useful Life 10 years The firm uses the valuation model for all three assets At 30 June 2020, the fair values of all assets were assessed. Machine A had a fair value of $45,000, and Machine B a fair value of $58,000. The remaining useful lives were assessed to be 5 years for Machine A and 4 years for Machine B. At this time the value of Machine C was unchanged. At 30 June 2021, Machine C was sold for a consideration of $75,000. On the same date the fair values of Machine A and Machine B were reassessed. Machine A had a fair value of $32,000 and Machine B a fair value of $54,000. Required: Prepare the journal entries for David Ltd for the years ending 30 June 2020 and 2021. Assume a tax rate of 30%.
As at 31 December 2020, Lambda Ltd’s property in its statement of financial position was: Property at cost (useful life 15 years) $4,500,000 Accumulated depreciation $600,000 On 1 July 2021, Lambda Ltd decided to sell the property. The property is being marketed by a property agent at a price of $4,200,000, which was considered a reasonably achievable price at that date. The expected costs to sell have been agreed at $100,000. Recent market transactions suggest that actual selling prices achieved for this type of property in the current market conditions are 10% less than the price at which they are marketed. At 31 December 2021 the property has not been sold. At what amount should the property be reported in Lambda Ltd’s statement of financial position as at 31 December 2021? $3,600,000 $3,750,000 $3,680,000 $4,200,000