Exercise 2.1On 30 June 2017, two-third of the shares of STA Ltd. (with a totalcapital of $ 4.800.000) was acquired by HRR Ltd. the balance sheet ofSTA Ltd. showed a debit balance of $ 2.400.000 or 1 January 2017 anda credit balance of $ 1.440.000 on 31 December 2017. The investmentby HRR Ltd. in shares of STA Ltd. is $ 3.600.000.Calculate the cost of control or capital reserve.

Capital reserve in business acquisition includes the amount which is paid by the company in…

Answered: On 30 June 2017, two-third of the…

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 15E

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6. On 30 June 2017, two-third of the shares of SIC Ltd. (with a total capital of $ 4.800.000) was acquired by HOR Ltd. the Balance Sheet of SIC Ltd. showed a debit balance of $ 2.400.000 on 1st January 2017 and a credit balance of $ 1.440.000 on 31 December 2017. The investment by HOR Ltd. in shares of SIC Ltd. Is $ 3.600.000. Calculate the cost of control or capital reserve. (a) 720000 (b) 620000 (c) 360000 (d) 180000 7. Cash payments to and on behalf of employees is an example of: (a) Cash flow from Operating activities (b) Cash flow from Investing activities (c) Cash flow from Financing activities (d) None of the above 8.Financial Reporting Council is an organisation of which country? (a) The USA (b) The UK (c) Australia (d) Canada
The following data are taken from the ledger of EVA Co. Retained Earnings Date Particulars Debit Credit 01/01/2017 06/30/2017 Dividends paid 12/31/2017 02/07/2018 04/30/2018 09/30/2018 Dividends paid 12/31/2018 12/31/2018 07/01/2019 12/31/2019 Balance P80,600 P25,000 Net income for 2017 Premium on share capital Loss on sale of land 42,500 10,000 5,000 20,000 Net income for 2018 Revaluation surplus Gain on sale of treasury stock 5,800 40,000 1,600 33,700 Net income 2019 Unrealized loss on FV OCI securities 3,400 What is the correct balance of Retained earnings on December 31, 20197
Prepare the journal entries for an investment accounted for under the equity method. a. On January 2, 2017, Workowski Corporation purchased 55,000 shares (26%) of Wendy Company at a cost of $8 per share. b. At the end of 2017, Wendy Company reported net income of $350,000 (Workowski’s share is 26%). c. Wendy Company reported a $215,000 net loss for 2017. Workowski’s share of the loss is 26%. d. In early 2018, Wendy Company paid a $75,000 dividend. Workowski’s share is 26%.
Following are the Balance Sheets of A Ltd. and its subsidiaries B Ltd. and C Ltd. as on 31st March, 2016: C Ltd. A Ltd. $ B Lta. $ $ I. Equity and Liabilities (1) Shareholders' Funds (a) Share Capital Shares of 100 each 12,50,000 | 10,00,000 6,00,000 (b) Reserves and Surplus : 1,80,000 1,60,000 1,00,000 20,000 72,000 51,000 Reserves Surplus Account (2) Current Liabilities Sundry Creditors 1,03,000 1,20,000 Total Equity and Liabilities 16,93,000 | 12,40,000 7,23,000 II. Assets (1) Non-current Assets Fixed Assets 2,80,000 5,50,000 3,75,000 (2) Current Assets 5,30,000 Investments at Cost Stock in Trade 10,30,000 1,20,000 2,63,000 Sundry Debtors 1,60,000 3,48,000 Total Assets 16,93,000| 12,40,000 7,23,000 (a) The break-up of investments, which were all made on 30th September, 2015, is as under: (i) A Ltd. held- 7,500 shares in B Ltd. at a cost of 8,50,000 and 1,500 shares in C Ltd. at a cost of 1,80,000. (ii) B Ltd. held- 4,000 shares in C Ltd. at a cost of 5,30,000. (b) (i) Sundry…
Problem 1 (Adapted)The shareholders’ equity of Yelan Company showed the following account balances on December 31, 2018:Share capital, P100 5,000,000Share Premium 1,000,000Retained earnings 2,000,000Revaluation surplus 800,000 Compute the book value per share on December 31, 2018.
QUESTION 2 Ariana Bhd is a pharmaceutical distributor which purchases prescription medicines and other medical products directly from pharmaceutical manufacturers and distribute across the country. During year 2020, Ariana Bhd has acquired three types of tangible non-current assets. The first non-current asset bought is a brand new machine that can facilitate medicines labelling process using the new technology, thus increase the capacity of distribution per day. The machine was bought on 15 April 2020 at a quoted price of RM4,000,000 on a term of 2/20, n/60. Ariana Bhd paid the machine in the discount period. In addition, the following expenditure incurred; Installation cost of RM150,000 and cost of storage for the machine of RM75,000 as it was delivered before the factory is ready for installation. Insurance of RM225,000 were incurred as the management seek to reduce the risk of fire. Out of this amount, 25% was meant to secure the machine while it still in transit. Expense incurred…
The following trial balance relates to Selt.plc for the year ended 31 December 2021: Equity shares of £1 each Share Premium Retained earnings at 1 January 2021 Property at cost Depreciation on property at 1 January 2021 Plant and equipment at cost Depreciation on plant and equipment at 1 January 2021 Inventory at 1 January 2021 Trade receivables Cash and cash equivalents Trade payables 5% Loan repayable 2026 Revenue Purchases Distribution costs Administrative expenses Research and development expenditure Loan Interest paid Dividend paid Further notes: £'000 34,800 22,800 Required: A Statement of Profit or Loss for the year ended 31 December 2021. A Statement of Financial Position as at 31 December 2021 4,900 4,000 6,840 155,000 22,050 12,750 19,600 300 4,000 287,040 £'000 56,000 2,000 7,780 3,200 4,500 1,560 12,000 200,000 287,040 2) 1) Inventory was valued at £3,800,000 on 31 December 2021. (This valuation is before note (4) below is considered). Property includes land valued at…
Hh3.
The Wondai Ltd Croup reports the following balances in its consolidated financial statements for the year ending 30 June Financial year 2018 $ 2017 $ Buildings 524,000 268,000 ACC Depr. - Buildings 190,000 143,000 Depr Expense - Buildings 50,000 23,000 On1 July 2017. the Wondai Ltd Group acquired 80%. the shares in Yallingup Ltd. which recorded the following account balances at that date: 1 July 2017 $ Buildings 80,000 Acc Depr.- Buildings 32,000 During the year ended 30 June 2018, the Wondai Ltd Group disposed of buildings with a carrying. amount of $63,000 Required: Calculate the amount of consolidated cash flows from investing activities in relation to the purchase of buildings for the year ending 30 June 2018
Book value per share1of Orlando Medical’s common stock outstanding at December 31,2018, wasa. 137.9.b. $35,147.c. $2.99.d. 20.1.
Liabilities and assets of Dreamers Ltd. as on 31st March, 2016 stood as under : $ in Lakh Assets $ in Lakhs Liabilities Share Capital 10% Preference Shares of $ 100 each Fixed Assets 130 Investments 24 30 Current Assets 20 Equity Shares of $ 10 each General Reserve 60 36 12% Debentures 28 Current Liabilities 20 174 174 Performers Ltd. signified their agreement to takeover the assets and liabilities of Dreamers Ltd. as per the following terms and conditions : (i) Fixed assets at 90% of the book value. (ii) Investments at 10% above the par value. (iii) Current assets and liabilities at book value except that stock-in-trade at cost amounting to $10 lakh was agreed to be taken over at a discount of 20%. (iv) 12% Debentures are to be discharged at a premium of 15% by issuing 12% debentures of Performers Ltd. (v) Preference shareholders are to be discharged at a premium of 15% by issuing 10% preference shares of $100 each. (vi) Equity shareholders in Dreamers Ltd. are to be issued 5 equity…
Assume that Horicon Corp acquired 25% of the common stock of Sheboygan Corp. on January 1, 2015, for $300,000. During 2015, Sheboygan Corp. reported net income of $160,000 and paid total dividends of $60,000. If Horicon uses the equity method to account for its investment, the balance in the investment account on December 31, 2015, will be:

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