Ocean Ltd is the parent entity to the wholly owned subsidiaries of River Ltd, Creek Ltd, and Puddle Ltd. During the year ended 30 June 2022 the following transactions occurred within Ocean Ltd group. The perpetual inventory system has been adopted by all entities in the Ocean Ltd group and the tax rate is 30% for all accounting periods. On 01 July 2021 Ocean Ltd sold an item of equipment to Creek Ltd for $750,000 cash. The original cost of the equipment was $950,000. Ocean Ltd adopted an accounting policy whereby equipment was being depreciated on a straight line basis over its useful life of 8 years. The carrying amount of the equipment in Ocean Ltd financial statements at the date of sale was $520,000. Subsequent to the transfer, Creek Ltd depreciated the equipment on a straight line basis over its remaining useful life of 4 years. Required: Fill in the missing amount for the following accounts that will appear in the consolidated adjusting journal entries for the group for the year ended 30 June 2022: Gain on Sale will be debited by $ Deferred Tax Asset will be debited by $ A depreciation adjustment will be recorded by a credit to Depreciation expense of $

Ocean Ltd is the parent entity to the wholly owned subsidiaries of River Ltd, Creek Ltd, and Puddle Ltd. During the year ended 30 June 2022 the following transactions occurred within Ocean Ltd group. The perpetual inventory system has been adopted by all entities in the Ocean Ltd group and the tax rate is 30% for all accounting periods. On 01 July 2021 Ocean Ltd sold an item of equipment to Creek Ltd for $750,000 cash. The original cost of the equipment was $950,000. Ocean Ltd adopted an accounting policy whereby equipment was being depreciated on a straight line basis over its useful life of 8 years. The carrying amount of the equipment in Ocean Ltd financial statements at the date of sale was $520,000. Subsequent to the transfer, Creek Ltd depreciated the equipment on a straight line basis over its remaining useful life of 4 years. Required: Fill in the missing amount for the following accounts that will appear in the consolidated adjusting journal entries for the group for the year ended 30 June 2022: Gain on Sale will be debited by $ Deferred Tax Asset will be debited by $ A depreciation adjustment will be recorded by a credit to Depreciation expense of $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On 1 July 2019, Michelle Ltd acquired all the issued shares of Tracy Ltd, paying $250 000 cash. At that date, the financial statements of Tracy Ltd showed the following information. Share capital Retained earnings $100 000 100 000 All the assets and liabilities of Tracy Ltd were recorded at amounts equal to their fair values at the acquisition date, except some inventories recorded at $10 000 below their fair value. Also, Michelle Ltd identified at acquisition date a patent with a fair value of $40 000 that Tracy Ltd has not recorded in its own accounts. Required 1. Prepare the acquisition analysis at 1 July 2019. 2. Prepare the consolidation worksheet entries for Michelle Ltd's group at 1 July 2019. 3. Discuss how the answers for 1 and 2, above, would change if the Michelle Ltd paid only $200 000 cash for the shares in Tracy Ltd.
Razor Afternoon Co. owns 80% interest in Slice Morning Co. During 2019, Razor sold inventories costing ₱200,000 to Slice for ₱300,000. One-fourth of the inventories were unsold as of December 31, 2019 and were included in Slice’s year-end statement of financial position at the purchase price from Razor. The individual financial statements of Razor and Slice on December 31, 2019 show the following information: Razor Slice Inventory 1,260,000 380,000 Sales 6,700,000 2,700,000 Cost of sales (3,015,000) (1,755,000) Gross profit 3,685,000 945,000 There are no fair value adjustments arising from the business combination date. Write the Eliminating Entries for Periodic Inventory System.
On 1 July 2019, Besar Ltd acquired all of the shares (cum div.) of Kecil Ltd. The statement of financial position provided by the two companies at 1 July 2019 is as follows: Besar Ltd Kecil Ltd Shares in Kecil Ltd 367,000 - Plant 230,000 320,000 Accumulated depreciation (120,000) (40,000) Land - 12,000 Goodwill 10,200 2,000 Inventory 30,000 51,000 Receivables 40,000 42,000 557,200 387,000 Share capital 280,000 200,000 General reserve 44,000 33,000 Retained earnings 131,200 134,000 Liabilities 102,000 20,000 557,200 387,000 At the date of the business combination, all the identifiable assets and liabilities of Kecil Ltd had carrying amounts equal to their fair values except for: Fair value Plant $300,000 Inventory 31,000 Receivables 43,000 The plant had a further useful life of 5 years. It…
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