On 1 July 2015, Ausra purchased 75% of Danute by way of a share exchange of two new shares in Ausra for every three purchased in Danute plus an immediate cash payment of $11,160,000. Ausra’s share price at the acquisition date was $4.70. Only the cash element of the consideration has been recorded. On the same date, Ausra purchased $5,000,000 of Danute’s 10% loan notes at par. The summarised financial statements of both companies are as follows: Ausra Danute $ 000 $ 000 Revenue 120,000 48,000 Cost of sales (84,000) (40,000) Gross profit 36,000 8,000 Operating expenses (11,900) (400) Profit from operations 24,100 7,600 Other income 300 - Finance costs - (1,200) Profit before tax 24,400 6,400 Income tax expense (6,000) (1,200) Profit for the year 18,400 5,200 Ausra Danute $ 000 $ 000 Non-current assets: Property, plant and equipment 38,640 16,000 Investments 16,280 - 54,920 16,000 Current assets Inventory 11,240 6,450 Receivables 13,600 7,355 Bank 5,160 2,195 30,000 16,000 Total Assets 84,920 32,000 Equity and liabilities Ordinary shares of $1 each 40,000 4,000 Retained earnings 17,720 8,800 Revaluation reserve 7,200 - 64,920 12,800 Non-current liabilities 10% loan notes - 10,000 Current Liabilities 20,000 9,200 Total Equity and Liabilities 84,920 32,000 The following information is relevant: 1)The fair value of Danute’s net assets differed from its carrying values at 1 July 2015. Plant was $8 million in excess of its net book value. Plant had 4 years remaining at the date of acquisition. The group depreciation policy is to charge depreciation on a proportionate basis and should be included in cost of sales. No adjustment was made for this in Danute’s financial statements. Calculate and show the figures in adjustment 1 would be recorded in consolidated income and statement of financial position.(Goodwill, depreciation, non-current asset,...).
On 1 July 2015, Ausra purchased 75% of Danute by way of a share exchange of two new shares in Ausra for every three purchased in Danute plus an immediate cash payment of $11,160,000. Ausra’s share price at the acquisition date was $4.70. Only the cash element of the consideration has been recorded. On the same date, Ausra purchased $5,000,000 of Danute’s 10% loan notes at par. The summarised financial statements of both companies are as follows:
|
|
Ausra |
Danute |
|
|
$ 000 |
$ 000 |
|
Revenue |
120,000 |
48,000 |
|
Cost of sales |
(84,000) |
(40,000) |
|
Gross profit |
36,000 |
8,000 |
|
Operating expenses |
(11,900) |
(400) |
|
Profit from operations |
24,100 |
7,600 |
|
Other income |
300 |
- |
|
Finance costs |
- |
(1,200) |
|
Profit before tax |
24,400 |
6,400 |
|
Income tax expense |
(6,000) |
(1,200) |
|
Profit for the year |
18,400 |
5,200 |
|
|
Ausra |
Danute |
|
|
$ 000 |
$ 000 |
|
Non-current assets: |
|
|
|
Property, plant and equipment |
38,640 |
16,000 |
|
Investments |
16,280 |
- |
|
|
54,920 |
16,000 |
|
Current assets |
|
|
|
Inventory |
11,240 |
6,450 |
|
Receivables |
13,600 |
7,355 |
|
Bank |
5,160 |
2,195 |
|
|
30,000 |
16,000 |
|
Total Assets |
84,920 |
32,000 |
|
Equity and liabilities |
|
|
|
Ordinary shares of $1 each |
40,000 |
4,000 |
|
|
17,720 |
8,800 |
|
Revaluation reserve |
7,200 |
- |
|
|
64,920 |
12,800 |
|
Non-current liabilities |
|
|
|
10% loan notes |
- |
10,000 |
|
Current Liabilities |
20,000 |
9,200 |
|
Total Equity and Liabilities |
84,920 |
32,000 |
The following information is relevant:
1)The fair value of Danute’s net assets differed from its carrying values at 1 July 2015. Plant was $8 million in excess of its net book value. Plant had 4 years remaining at the date of acquisition. The group
Calculate and show the figures in adjustment 1 would be recorded in consolidated income and
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