Question 2Nick Ltd acquired 100% of the issued capital of Wing Ltd on 1 July 2011 for $270000. The statements offinancial position of the companies immediately after the acquisition are provided below. All assets havebeen reported following fair value.Statement of Financial PositionFor the year ended 1 July 2011Nick LtdWing Ltd$SShareholders' equityShare capital450,000180,000General reserve45,00025,000Retained earnings140,00020,000Total shareholders' equity635,000225,000AssetsCurrent assetsCash at Bank50,00030,000Accounts Receivable20,00010,000Inventory100,00025.000170,00065,000Non-current assetsInvestment in Wing Ltd270,000Land250,000200,000Plant & Equipment100,00080.000620,000280,000Total assets790,000345,000LiabilitiesCurrent liabilitiesAccounts Payable40,00010,000Interest Payable55,00018,000Non-current liabilitiesBank loan100,000102,000Total liabilities155,000120,000Net assets635,000225,000Required1. Calculate Goodwill (show workings)2. Prepare consolidation journal entry at the date of acquisition.3. Prepare consolidation worksheet.4. Prepare the consolidated statement of financial position as at 1 July 2011 (immediately after theacquisition).15.0008,000

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Question 2 Nick Ltd acquired 100% of the issued capital of Wing Ltd on 1 July 2011 for $270000. The statements of financial position of the companies immediately after the acquisition are provided below. All assets have been reported following fair value. Statement of Financial Position For the year ended 1 July 2011 Nick Ltd Wing Ltd $ $ Shareholders' equity Share capital 450,000 180,000 General reserve 45,000 25,000 140,000 20,000 Retained earnings Total shareholders' equity 635,000 225,000 Assets Current assets Cash at Bank 50,000 30,000 Accounts Receivable 20,000 10,000

Question 2 Nick Ltd acquired 100% of the issued capital of Wing Ltd on 1 July 2011 for $270000. The statements of financial position of the companies immediately after the acquisition are provided below. All assets have been reported following fair value. Statement of Financial Position For the year ended 1 July 2011 Nick Ltd Wing Ltd $ $ Shareholders' equity Share capital 450,000 180,000 General reserve 45,000 25,000 140,000 20,000 Retained earnings Total shareholders' equity 635,000 225,000 Assets Current assets Cash at Bank 50,000 30,000 Accounts Receivable 20,000 10,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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