On 30 June 2021 Parent Ltd acquired 100 per cent of the shares in Subsidiary Ltd for a cost of $1,000,000. The account balances of the two entities at the date of acquisition were: Parent Ltd ($) Subsidiary Ltd ($) Cash 200,000 100,000 Accounts receivable 260,000 180,000 Inventory 400,000 220,000 Property, plant and equipment 800,000 700,000 Accumulated depreciation (240,000) (180,000) Land 600,000 200,000 Investment in Sydney Ltd 1,000,000 - Accounts payable 220,000 140,000 Loans payable 400,000 380,000 Share capital 1,800,000 400,000 Retained earnings 600,000 300,000 Additional information: All assets of Subsidiary Ltd were fairly valued at acquisition except the land, which had a fair value of $280,000. The tax rate is 30 per cent. Required: (a) Prepare the consolidation journal entries
On 30 June 2021 Parent Ltd acquired 100 per cent of the shares in Subsidiary Ltd for a cost of $1,000,000. The account balances of the two entities at the date of acquisition were: Parent Ltd ($) Subsidiary Ltd ($) Cash 200,000 100,000 Accounts receivable 260,000 180,000 Inventory 400,000 220,000 Property, plant and equipment 800,000 700,000 Accumulated depreciation (240,000) (180,000) Land 600,000 200,000 Investment in Sydney Ltd 1,000,000 - Accounts payable 220,000 140,000 Loans payable 400,000 380,000 Share capital 1,800,000 400,000 Retained earnings 600,000 300,000 Additional information: All assets of Subsidiary Ltd were fairly valued at acquisition except the land, which had a fair value of $280,000. The tax rate is 30 per cent. Required: (a) Prepare the consolidation journal entries
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On 30 June 2021 Parent Ltd acquired 100 per cent of the shares in Subsidiary Ltd for a cost of $1,000,000. The account balances of the two entities at the date of acquisition were:
|
Parent Ltd ($) |
Subsidiary Ltd ($) |
||
|
Cash |
200,000 |
100,000 |
|
|
|
260,000 |
180,000 |
|
|
Inventory |
400,000 |
220,000 |
|
|
Property, plant and equipment |
800,000 |
700,000 |
|
|
|
(240,000) |
(180,000) |
|
|
Land |
600,000 |
200,000 |
|
|
Investment in Sydney Ltd |
1,000,000 |
- |
|
|
Accounts payable |
220,000 |
140,000 |
|
|
Loans payable |
400,000 |
380,000 |
|
|
Share capital |
1,800,000 |
400,000 |
|
|
|
600,000 |
300,000 |
Additional information:
- All assets of Subsidiary Ltd were fairly valued at acquisition except the land, which had a fair value of $280,000.
- The tax rate is 30 per cent.
Required:
(a) Prepare the consolidation
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