On 1st January 2016, Soft Ltd acquired 70% of share capital of Hard Ltd for $8,175,000. Equity of Hard Ltd was: Share capital $7,600,000 General reserve $2,100,000 Retained earnings $1,200,000 All assets of Hard Ltd were recorded at fair value on acquisition except for an item of marine equipment that had a higher fair value of $360,000 than its carrying amount. Cost of the marine equipment was $2,100,000 accumulated depreciation of $1,372,000. Required: Use the worksheet below to compute Goodwill or Gain on acquisition and the Non-controlling interest using net method. Provide the necessary journal entries for Soft Ltd (parent) to eliminate Hard’s share of pre-acquisition capital and reserves.
On 1st January 2016, Soft Ltd acquired 70% of share capital of Hard Ltd for $8,175,000. Equity of Hard Ltd was: Share capital $7,600,000 General reserve $2,100,000 Retained earnings $1,200,000 All assets of Hard Ltd were recorded at fair value on acquisition except for an item of marine equipment that had a higher fair value of $360,000 than its carrying amount. Cost of the marine equipment was $2,100,000 accumulated depreciation of $1,372,000. Required: Use the worksheet below to compute Goodwill or Gain on acquisition and the Non-controlling interest using net method. Provide the necessary journal entries for Soft Ltd (parent) to eliminate Hard’s share of pre-acquisition capital and reserves.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On 1st January 2016, Soft Ltd acquired 70% of share capital of Hard Ltd for $8,175,000. Equity of Hard Ltd was:
Share capital $7,600,000
General reserve $2,100,000
All assets of Hard Ltd were recorded at fair value on acquisition except for an item of marine equipment that had a higher fair value of $360,000 than its carrying amount. Cost of the marine equipment was $2,100,000
Required:
- Use the worksheet below to compute
Goodwill or Gain on acquisition and the Non-controlling interest using net method. - Provide the necessary
journal entries for Soft Ltd (parent) to eliminate Hard’s share of pre-acquisition capital and reserves.
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