On 1 July 2013 Donald Ltd acquired all of the share capital (cum div) of Duck Limited for a consideration of $600,000 cash and a brand that was held in their accounts at a fair value of $50,000. Duck Ltd reported a dividend payable of $8,000 at 1 July 2013. At that date all the identifiable assets and liabilities were recorded at fair value with the exception of: The inventory was all sold by 30/6/14. The remaining useful life of the plant is 5 years. The accounts receivable were collected by 30/6/14 for $18,000. The land was sold on 30/12/16 for $90,000. The plant was on hand still at 30/6/17. At the date of acquisition the equity of Duck Ltd consisted of: Share capital 420000 General reserve 90000 Retained earnings 70000 Assume a tax rate of 30%. Required A. Prepare the acquisition analysis at 1 July 2013. B. Prepare the BCVR and pre-acquisition journal entries at 1 July 2013. C. Prepare the BCVR and pre-acquisition journal entries at 30 June 2017.
On 1 July 2013 Donald Ltd acquired all of the share capital (cum div) of Duck Limited for a consideration of $600,000 cash and a brand that was held in their accounts at a fair value of $50,000. Duck Ltd reported a dividend payable of $8,000 at 1 July 2013. At that date all the identifiable assets and liabilities were recorded at fair value with the exception of: The inventory was all sold by 30/6/14. The remaining useful life of the plant is 5 years. The accounts receivable were collected by 30/6/14 for $18,000. The land was sold on 30/12/16 for $90,000. The plant was on hand still at 30/6/17. At the date of acquisition the equity of Duck Ltd consisted of: Share capital 420000 General reserve 90000 Retained earnings 70000 Assume a tax rate of 30%. Required A. Prepare the acquisition analysis at 1 July 2013. B. Prepare the BCVR and pre-acquisition journal entries at 1 July 2013. C. Prepare the BCVR and pre-acquisition journal entries at 30 June 2017.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On 1 July 2013 Donald Ltd acquired all of the share capital (cum div) of Duck Limited for a consideration of $600,000 cash and a brand that was held in their accounts at a fair value of $50,000. Duck Ltd reported a dividend payable of $8,000 at 1 July 2013.
At that date all the identifiable assets and liabilities were recorded at fair value with the exception of:
The inventory was all sold by 30/6/14. The remaining useful life of the plant is 5 years. The
The land was sold on 30/12/16 for $90,000. The plant was on hand still at 30/6/17.
At the date of acquisition the equity of Duck Ltd consisted of:
Share capital 420000
General reserve 90000
Assume a tax rate of 30%.
Required
A. Prepare the acquisition analysis at 1 July 2013.
B. Prepare the BCVR and pre-acquisition
C. Prepare the BCVR and pre-acquisition journal entries at 30 June 2017.
Answer all the subparts A,B,C .if answered within 45 mins,it would be helpful!!I will upvote
Transcribed Image Text:ASSET
Inventory
Land
Plant
(less depn)
Book Value
Market Value
10,000
14,000
80,000
85,000
16,000
(2000)
14,000
19,000
Acounts Receivable
20,000
18,000
Transcribed Image Text:Trial Balances
As at 30 June 2017
Oonald Itd
Ouck Ltd
DR
CR
DR
CR
Sales Revenue
Cost of Sales
Wages and Salaries
Depreciation Expense
Service Expense
Interest Expense
Other Expenses
Gain on Sale of Non Current Asset
1,247,100
952,500
456,000
72,000
8,000
788,000
161,000
17,000
3,500
4,800
5,600
9,300
4,000
6,000
7,000
Service Revenue
Interest Revenue
Dividend Revenue
5,000
7,000
5,600
1,200
5,500
Income tax expense
Retained Earnings 1/7/16
Dividend Paid
Dividend Declared
Share Capital
General Reserve
Other Equity 1/7/16
Gains on Financial Assets (OCI)
Loan Payable to Tony Ltd
Deferred Tax Liability
Dividend Payable
Shares in Claire Ltd
Cash
Inventories
Other Current Assets
Dividend Receivable
Loan receivable from Claire Ltd
Financial Assets
97,120
118,480
190,820
61,280
10,000
3,000
12,000
2,500
500,000
420,000
155,000
67,100
12,000
4,000
1,000
6,000
16,000
54,900
6,600
12,000
2,500
642,000
86,000
147,500
36,000
300,000
169,500
11,000
2,500
16,000
15,000
74,300
68,000
Plant and Equipment
Acc. Depreciation Plant
Land
228,000
12,600
12,900
71,500
2,189,720
120,000
2,189,720
1,575,880
1,575,880
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