reports goodwill
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On 1 January 20X1 Tall plc acquired 80% of ordinary shares of Small plc for a price of £30,000, when Small plc’s net assets had fair value of £12,000. The non-controlling interest (NCI) in Small plc was consolidated at its fair value of £6,000.
At 31 December 20X1, Tall plc’s directors decided to take a
Tall plc’s IFRS consolidated statement of financial position at 31 December 20X1 reports goodwill (related to the investment in Small plc) for an amount of:
£14,000
£13,000
£15,000
£7,000
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- Quark acquired 70% of the 1m issued £1 ordinary shares of Whey on 1 January 20X1 when Whey's retained earnings were £1,500,000. The group measures non-controlling interest (NCI) at fair value at the acquisition date. The FV of the NCI of Whey as at 1 January 20X1 was £1,325,000. An impairment review performed at 31 December 20X1 indicated that goodwill on the acquisition of Whey had impaired by £425,000. The retained earnings of Whey at 31 December 20X1 were £2,750,000. The NCI to be included in the consolidated statement of financial position at 31 December 20X1 will be: O a. £1,275,000 O b. £997,500 O c. £1,572,500 O d. None of these options are correct O e. £1,700,000 O f. £2,150,000 O g. £2,022,500On 1 July 2020 Harry Ltd purchased 70 per cent of the issued share capital of Wills Ltd and has control of Wills. The fair value of the net assets of Wills Ltd on that date was represented as follows: Share Capital $1,800,000 Retained 400,000 2,200,000 Harry Ltd paid cash consideration of $2,000,000 for Wills. Wills Ltd made an operating profit of $450,000, there were no intragroup transactions during the period ended 30 June 2021. Goodwill had been determined to have been impaired during the year by $45,000. What consolidation journal entries are required for the period and what is the non-controlling interest in equity as at 30 June 2021?On 30 June 20X7, Edison Ltd acquired all the assets and liabilities of Oliver Ltd, with Oliver Ltd going into liquidation. In exchange for these assets and liabilities, Edison Ltd issued 60,000 shares, and the fair value of each share at the acquisition date is $4. Costs of issuing these shares amounted to $2,000. Legal costs associated with the acquisition of Oliver Ltd amounted to $1,500. The assets and liabilities of Oliver Ltd at 30 June 20X7 were as follows: Carrying amount Fair value Cash 12 000 12 000 Accounts receivable (Cost: $45 000, Estimated uncollectable debts: $5000) 40 000 36 000 Inventory 60 000 76 000 Plant (Cost: $200 000, Accumulated 120 000 145 000 depreciation: $80 000) Accounts payable 40 000 40 000 Additional information: • Oliver Ltd had not recorded an internally developed patent. Edison Ltd valued this at $26,000. Oliver Ltd had not recorded a legal claim as a liability due to the uncertainty of an outcome. Edison Ltd estimated the fair value of this…
- DDaniel Ltd purchased 75 per cent of the issued capital and in the process gained control over Riccardo Ltd on 1 July 2020. The fair value of the net assets of Riccardo Ltd at purchase was represented by: Share Capital $3,760,000 Retained Earnings 1,320,000 Daniel Ltd paid cash consideration of $4 000 000 for Riccardo Ltd. During the period ended 30 June 2021, Riccardo Ltd paid management fees of $540 000 to Daniel Ltd and Riccardo Ltd had an operating profit of $980 000. Riccardo Ltd's opening retained earnings at the beginning of the period were $1 460 000. At the end of the period Riccardo Ltd declared a dividend of $90 000. There were no other inter-company transactions. Goodwill was determined to have been impaired by $19 000 during the period. Companies in the group accrue dividends when they are declared by subsidiaries.For the period ended 30 June 2021, what consolidation journal entries are required and what is the non-controlling interest?Chalmers Ltd is a parent company that prepares consolidated financial statements. On 1 July 2019 Chalmers Ltd acquired 30% of the shares in Palmer Ltd at a cost of $210,000. The directors of Chalmers Ltd believe that they exert 'significant influence' over Palmer Ltd. At that time the equity in Palmer Ltd consisted of: Share capital $400,000; Retained profits $150,000 This equity at the acquisition date reflected the fair value of net assets in Palmer Ltd with the exception of some depreciable non-current assets with a fair value of $120,000 (before tax) greater than carrying amount. These depreciable assets are expected to have a further 5-year life. The results of Palmer Ltd for the year ended 30 June 2021 is as follows: 30 June 2020 30 June 2021 S S Profit before tax 150,000 200,000 Income tax (20,000) (30,000) 170,000 130,000 Profit after tax (12,000) (15,000) Dividends paid (10,000) (20,000) Transfer to General Reserve 108,000 135,000 Retained earnings Additional information: At…On 31 December 20x1, AAA Ltd acquired 70% equity interest in BBB Ltd by paying a consideration of $120,000 to the shareholders when the fair value of BBB Ltd's identifiable net assets was ascertained to be $100,000. a) What is the amount of goodwill if any? b) What is the amount of non-controlling interest (NCI) at acqusition assuming AAA measures any NCI in the subsidiary at the proportionate share of the subsidiary's identifiable net assets?
- Madari Ltd purchased 100% of the shares of Concerto Ltd on 1 July 2020 for $70,000. On the date of acquisition, the equity of the two entities was as follows: Madari Ltd($) Concerto Ltd ($) General Reserve 25,000 5,500 Retained Earnings 4,500 3,300 Share Capital 60,000 38,000 At 1 July 2020, all of the identifiable assets and liabilities of Concerto Ltd were recorded at fair value except for the following: Carrying Amount ($) Fair Value ($) Inventory 3,000 4,500 Plant and Equipment 60,000 65,000 The plant and equipment had a further 5-year useful life. Any valuation adjustments are made on…Madari Ltd purchased 100% of the shares of Concerto Ltd on 1 July 2020 for $70,000. On the date of acquisition, the equity of the two entities was as follows: Madari Ltd($) Concerto Ltd ($) General Reserve 25,000 5,500 Retained Earnings 4,500 3,300 Share Capital 60,000 38,000 At 1 July 2020, all of the identifiable assets and liabilities of Concerto Ltd were recorded at fair value except for the following: Carrying Amount ($) Fair Value ($) Inventory 3,000 4,500 Plant and Equipment 60,000 65,000 The plant and equipment had a further 5-year useful life. Any valuation adjustments are made on…On 30 June 20X1, Buyer plc obtained control of Target plc by purchased 60% of Target plc’s ordinary shares. The revenue reported by Buyer plc and Target plc in their separate income statements for the financial year ending 31 December 20X1 are £10,000 and £2,000 respectively. Assume no intra-group transactions and revenues are spread evenly throughout the year. Revenue reported in Buyer plc’s consolidated income statement for the year ending 31 December 20X1 is: a. £12,000 b. £11,200 c. £11,000 d. £10,600 e. £6,000
- On 1 January 20X8, Coconut acquired 80% of the share capital of Rice for £100,000 when Rice had retained earnings of £30,000. At 31 December 20X9, the reserves of Coconut were £400,000 and for Rice they were £50,000. NCI is measured using the fair value method and goodwill has impaired by £21,600 to date. What amount should be presented in the consolidated statement of financial position at 31 December 20X9, as the retained earnings of the group? a. £398,400 b. £398,720 O c. £416,000 d. £402,720 e. £428,400 f. None of these options are correct g. £394,400Parent Ltd paid $237,000 for 90% of the shares of Subsidiary Ltd on 1 July 2020. All identifiable assets and liabilities of the subsidiary Ltd were recorded at fair value at acquisition date. At acquision date, the equity of Subsidiary Ltd consisted of the following. Share capital $125,000 Retained earnings $110,000 The Non-controlling interest in Subsidiary Ltd was considered to have a fair value of $25,000 and Parent Ltd uses the full goodwill method. During the 2020/21 year Tortoise Ltd recorded a profit of $34,000. Assume an income tax rate of 30%. Required Prepare the acquisition analysis at 1 July 2020 clearly showing fair value of goodwill in subsidiary and premium paid by the Parent Ltd. Prepare the journal entry for the profit made by Tortoise Ltd on 30 June 2021 to record the non-controlling interest.Accounting Victoria Ltd purchased from Albert Ltd the following parcel of assets and liabilities representing a business. In exchange for these assets and liabilities, Victoria Ltd issued 50 000 shares, and the fair value of each share at the acquisition date is $5.50. After the transaction, Albert Ltd continued in business otherwise unaffected. Victoria Ltd recognised the brand ‘Bert’ that was not recognised in the record of Albert Ltd as it was an internally developed brand. It was calculated that this brand had a fair value of $110 000. Cost Carrying amount Fair value Accounts receivable 20 000 18 500 15 000 Machinery 120 000 100 000 86 000 Accounts payable 22 000 22 000 22 000 Additional information: Victoria Ltd also purchased all the share capital of Edward Ltd in the same financial year. Edward has 100 000 shares outstanding, and its net assets were at fair value. The cost of acquisition for Edward was $1 cash plus one share in…