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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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

H Ltd
5 Ltd
H Ltd
S Ltd
Cash
200
20 Account Payable
Other current
300
40
aset
50
40 Bank loan
400
20
Investment in 5
Ltd
2,000
3,000
Share Capital
4,000
100
Fixed Asset
150 Retained Earnings
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

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