H Ltd S Ltd H Ltd SLtd Cash Other current 200 20 Account Payable 300 40 aset 500 40 Bank loan 400 20 Investment in S Ltd 2,000 3,000 Share Capital 150 Retained Earnings 4,000 100 Fixed Asset 1,000 50 TOTAL ASSET 5700 210 TOTAL LIABILITIES AND EQUITIES 5700 210 H. Ltd. acquired 80% shares in S Ltd. on October 1, 2019 for $ 2,000. At the date of acquisition all the assets and liabilities of S Ltd were reflected at fair value • The Retained earnings of S Ltd. on April 1, 2019 was $ 200 H Ltd measures the Non Controlling Interest at its proportionate share of the acquiree's net identifiable assets. • S Ltd transferred goods to H Ltd at a transfer price of $ 300. The sales policy of H Ltd is to add 50 % of mark up to its cost. Two-thirds remained in inventory at the year end. Required : Calculate goodwill at the date of acquisition and unrealized profit for holding company

H Ltd S Ltd H Ltd SLtd Cash Other current 200 20 Account Payable 300 40 aset 500 40 Bank loan 400 20 Investment in S Ltd 2,000 3,000 Share Capital 150 Retained Earnings 4,000 100 Fixed Asset 1,000 50 TOTAL ASSET 5700 210 TOTAL LIABILITIES AND EQUITIES 5700 210 H. Ltd. acquired 80% shares in S Ltd. on October 1, 2019 for $ 2,000. At the date of acquisition all the assets and liabilities of S Ltd were reflected at fair value • The Retained earnings of S Ltd. on April 1, 2019 was $ 200 H Ltd measures the Non Controlling Interest at its proportionate share of the acquiree's net identifiable assets. • S Ltd transferred goods to H Ltd at a transfer price of $ 300. The sales policy of H Ltd is to add 50 % of mark up to its cost. Two-thirds remained in inventory at the year end. Required : Calculate goodwill at the date of acquisition and unrealized profit for holding company

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 24E

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During 2021, Anthony Company purchased debt securities as a long-term investment and classified them as trading. All securities were purchased at par value. Pertinent data are as follows: The net holding gain or loss included in Anthonys income statement for the year should be: a. 0 b. 3,000 gain c. 9,000 loss d. 12,000 loss
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9.1 Calculate Left Ltd's share of profits in Right Ltd for the year ended 30 June 2023. The following information is relevant to questions 9.1 and 9.2. Left is a parent company that prepares consolidated financial statements. On 1 July 2021 Left Ltd acquired 40% of the equity in Right Ltd for $220 000. At this date the equity in Right Ltd consisted of: Capital $250 000 Revaluation reserve $50 000 Retained profits $150 000 Right Ltd carried its assets fair values with the exception of one item of plant & equipment whose fair value was $20 000 greater than its carrying amount. The estimated useful life of this item is 4 years. Summary of movements in the retained earnings of Right Ltd: 2022 2023 Profit after tax Retained profits at start Dividends 140 000 200 000 150 000 210 000 (80 000) 210 000 (100 000) 310 000 Retained profits at end At 30 June 2022 there were unrealised profits before tax of $10 000 arising from inventory transfers between the two entities.
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