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Please solve this question with steps by steps in detail and show work ABC Ltd acquires 100 per cent of RedCarpet Ltd on 1 July 2021. ABC Ltd pays the shareholders of RedCarpet Ltd the following consideration: Cash 35 000 Plant and equipment fair value $125 000; carrying amount in the books of ABC Ltd $85 000 Land fair value $150 000; carrying amount in the books of ABC Ltd $100 000 There are also legal fees of $95 000 involved in acquiring RedCarpet Ltd. On 1 July 2021 RedCarpet Ltd’s statement of financial position shows total assets of $300 000 and liabilities of $150 000. The fair value of the assets is $400 000. Required: Has any goodwill been acquired and, if so, how much? And discuss the potential for including associated legal fees into the cost of acquiring RedCarpet using appropriate accounting standard.

FINANCIAL ACCOUNTING

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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ABC Ltd acquires 100 per cent of RedCarpet Ltd on 1 July 2021. ABC Ltd pays the shareholders of RedCarpet Ltd the following consideration:

Cash	35 000
Plant and equipment	fair value $125 000; carrying amount in the books of ABC Ltd $85 000
Land	fair value $150 000; carrying amount in the books of ABC Ltd $100 000

There are also legal fees of $95 000 involved in acquiring RedCarpet Ltd.

On 1 July 2021 RedCarpet Ltd’s statement of financial position shows total assets of $300 000 and liabilities of $150 000. The fair value of the assets is $400 000.

Required:

Has any goodwill been acquired and, if so, how much?
And discuss the potential for including associated legal fees into the cost of acquiring RedCarpet using appropriate accounting standard.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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aste Company owns an 80% controlling interest in the Bastion Company. Bastion regularly sells merchandise to Baste, which then sold to outside parties. The gross profit on all such sales is 40%. On January 1, 2019, Baste sold land and a building to Bastion. The value of the parcel is 20% to land and 80% to structures. The data are the following:Baste BastionInternally generated net income, 2019 P1,560,000 P750,000Internally generated net income, 2020 10,320,000 705,000Intercompany merchandise sales, 2019 300,000Intercompany merchandise sales, 2020 360,000Intercompany inventory, December 31, 2019 45,000Intercompany inventory, December 31, 2020 60,000Cost of real estate sold on January 1, 2019 1,800,000Sales price of real estate on January 1, 2019 2,400,000Depreciable life of building 20 yearsFor 2019, what is the consolidated comprehensive income attributable to controlling interest?a. 1,575,000b. 1,597,500c. 1,569,600d. 1,875,000
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