On 1 July 2021 Salzburg Ltd acquired the shares of Vienna Ltd for $60 000. At acquisition date, the capital of Vienna Ltd consisted of 44 000 ordinary shares each fully paid at $1. There were retained earnings of $4 000. All the identifiable assets and liabilities of Vienna Ltd were recorded at amounts equal to fair value except for: Carrying Fair Amount Value $12 000 $15 000 Inventory Machinery (cost $100 000) 80 000 82 000 Land 60 000 70 000 Salzburg Ltd Balance Sheet as at 1 July 2021 Share capital $134 000 $41 400 Retained earnings $15 400 Cash at bank $100 000 Land $60 000 Investment in Wayne Ltd

On 1 July 2021 Salzburg Ltd acquired the shares of Vienna Ltd for $60 000. At acquisition date, the capital of Vienna Ltd consisted of 44 000 ordinary shares each fully paid at $1. There were retained earnings of $4 000. All the identifiable assets and liabilities of Vienna Ltd were recorded at amounts equal to fair value except for: Carrying Fair Amount Value $12 000 $15 000 Inventory Machinery (cost $100 000) 80 000 82 000 Land 60 000 70 000 Salzburg Ltd Balance Sheet as at 1 July 2021 Share capital $134 000 $41 400 Retained earnings $15 400 Cash at bank $100 000 Land $60 000 Investment in Wayne Ltd

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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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

Balance Sheet as at 1 July 2021
Share capital
Retained earnings
$44 000
$4.000
Cash at bank
$3.000
Machinery
$80 000
Land
$60.000
Inventory
$12 000
Loans
$107 000
The Company tax rate is 30%.
Required:
1. Complete the acquisition analysis as at the date of acquisition.
2. Prepare the adjusting journal entries for the consolidation worksheet at 1 July 2021.
Narrations are required.
3. Complete the consolidation worksheet as at I July 2021 on the next page

On 1 July 2021 Salzburg Ltd acquired the shares of Vienna Ltd for $60 000. At acquisition
date, the capital of Vienna Ltd consisted of 44 000 ordinary shares each fully paid at $1.
There were retained earnings of $4 000. All the identifiable assets and liabilities of Vienna
Ltd were recorded at amounts equal to fair value except for:
Carrying
Fair
Amount
Value
$12 000
Inventory
Machinery (cost $100 000)
$15.000
80 000
82 000
Land
60 000
70 000
Salzburg Ltd Balance Sheet as at 1 July 2021
Share capital
$134 000
Retained earnings
$41 400
$15 400
Cash at bank
$100 000
Land
$60 000
Investment in Wayne Ltd

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