On 1 July 2020, Big Ltd acquired all the issued share capital of Small Ltd for cash for an amount of $1,050,000. On the date of the acquisition, the statements of the financial position of both entities are as follows: Big Ltd ($) Small Ltd ($) Assets Cash 21,000 10,500 Accounts receivable 315,000 115,500 Land 420,000 210,000 Plant 1,680,000 1,050,000 Investment in Small Ltd 1,050,000 3,486,000 1,386,000 Liabilities Accounts payable 126,000 63,000 Loans payable 840,000 315,000 Shareholders’ equity Share capital 2,100,000 420,000 Retained earnings 420,000 588,000 3,486,000 1,386,000 Required: a. Calculate the goodwill on acquisition assuming all net assets of small Ltd are recorded in fair value. b. Prepare consolidation journal entries. c.
On 1 July 2020, Big Ltd acquired all the issued share capital of Small Ltd for cash for an amount of $1,050,000. On the date of the acquisition, the
|
Big Ltd ($) |
Small Ltd ($) |
Assets |
|
|
Cash |
21,000 |
10,500 |
Accounts receivable |
315,000 |
115,500 |
Land |
420,000 |
210,000 |
Plant |
1,680,000 |
1,050,000 |
Investment in Small Ltd |
1,050,000 |
|
|
3,486,000 |
1,386,000 |
Liabilities |
|
|
Accounts payable |
126,000 |
63,000 |
Loans payable |
840,000 |
315,000 |
Shareholders’ equity |
|
|
Share capital |
2,100,000 |
420,000 |
|
420,000 |
588,000 |
|
3,486,000 |
1,386,000 |
Required:
a. Calculate the
b. Prepare consolidation
c.
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