PKT Ltd acquired 80% of the ordinary shares of CF Ltd. The net assets were fairly valued on 1 January 2021 except for machinery that were undervalued by R 550 000. The machine was purchased on 1 January 2020 for R1 250 000 and had a useful life of 5 years. No adjustments at acquisition for the above matter. Prepare the journal entries (with narrations) for the year ended 31 December 2022. Assume a tax rate of 30%

PKT Ltd acquired 80% of the ordinary shares of CF Ltd. The net assets were fairly valued on 1 January 2021 except for machinery that were undervalued by R 550 000. The machine was purchased on 1 January 2020 for R1 250 000 and had a useful life of 5 years. No adjustments at acquisition for the above matter. Prepare the journal entries (with narrations) for the year ended 31 December 2022. Assume a tax rate of 30%

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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Question

PKT Ltd acquired 80% of the ordinary shares of CF Ltd.
The net assets were fairly valued on 1 January 2021
except for machinery that were undervalued by R
550 000. The machine was purchased on 1 January
2020 for R1 250 000 and had a useful life of 5 years. No
adjustments at acquisition for the above matter. Prepare
the journal entries (with narrations) for the year ended
31 December 2022. Assume a tax rate of 30%

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