Jenna Ltd acquired all the equity in Cooper Ltd on 31 December 20X4 for $450000. At the control date, the equity of Cooper was recorded as paid-up capitalof $300 000 and retained profits of $120 000. The purchase price was basedon the agreed fair values of Cooper's identifiable assets and liabilities on thatdate. The following items were not at fair value in Cooper's financial statementson the control date.InventoriesPlant (Cost of $400 000, Accumulateddepreciation of $51 200)Carryingamount20 000348 800Fairvalue27 000308800Other information:• All the inventories held by Cooper at the control date were sold during FY20X5.• Both Cooper and the group entity account for their plant by the cost model, andapply straight-line depreciation to the plant. The plant in Cooper Ltd is expectedto have a remaining useful life of 10 years from 31 December 20X4, and noresidual value.• Jenna sold goods to Cooper for $6 000 during FY20X5, the cost of theseinventories was $3 500. All these inventories were still on hand by Cooper by 31December 20X5, the year-end.Required:Prepare all the necessary consolidation journal entries at 31 December 20X5,the year-end.Note 1) Use the provided journal entry template to enter your answer. 2)Workings/calculations or narrations are NOT required.

Consolidation means combining assets, liabilities, and other items on the balance sheet. In this, a…

Answered: Required: Prepare all the necessary…

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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Jam Ltd acquired all the equity in Cab Ltd on 31 December 20X4 for $370 000. At the control date, the equity of Cab was recorded as Paid-up capital of $250 000 and Retained profits of $31 000. The purchase price was based on the agreed fair values of Cab's identifiable assets and liabilities on that date. The following items were not at fair value in Cab's financial statements on the control date. Carrying amount ($) Fair value ($) Inventory 31 000 40 000 Property (Cost of $350 000, Accumulated depreciation of $100 000) 250 000 300 000 Other information: • Both Cab and the group entity account for its property by the cost model, and apply straight-line depreciation to the property. The property in Cab Ltd is expected to have a remaining life of 20 years from 31 December 20X4, and no residual value. • Cab sold goods to Jam for $10,000 during FY20X5, the cost of these inventories was 7,000. All these inventories were still on hand by Jam by 31 December 20X5, the year-end. Required:…
On August 1, 20x1, German Corp. acquired all the identifiable assets and assumed the liabilities of Marasigan Corp. by paying cash of P6,000,00O. Marasigan Corp assets and liabilities have a book values of P7,000,000 and P2,200,000, respectively. The book value of assets and liabilities of Marasigan Corp. is equal to its fair value, except for inventory which is overvalued by P50,000; undervalued building of P400,000; and undervalued accounts payable of P20,000. German Corp. also paid general and administrative cost of P5,000; finder's fee of P6,000 and accountants fee of P25,00O. What is the total amount of goodwill after business combination?
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On 1 July 2022, Dean Ltd acquired the remaining 80% of the issued shares of Lewis Ltd for shares in Dean Ltd with a fair value of $1 000 000. At that date, the financial statements of Lewis Ltd showed the following information. All the assets and liabilities of Lewis Ltd were recorded at amounts equal to their fair values at the acquisition date, except some equipment recorded at $50 000 below its fair value with a related accumulated depreciation of $80 000. Assume the equipment has not been revalued in the subsidiaries accounts. Also, Dean Ltd identified at acquisition date a contingent liability related to a lawsuit where Lewis Ltd was sued by a former supplier and attached a fair value of $40 000 to that liability. The previous held interest by Dean Ltd in Lewis Ltd (ie 20% of the issued shares) was recognised by in Dean Ltd.’s accounts at the fair value at acquisition date of $250 000. Dean Ltd incurred $15 000 in acquisition related costs including $10 000 in share issue costs.…
On 1 July 2022, Dean Ltd acquired the remaining 80% of the issued shares of Lewis Ltd for shares in Dean Ltd with a fair value of $1 000 000. At that date, the financial statements of Lewis Ltd showed the following information. All the assets and liabilities of Lewis Ltd were recorded at amounts equal to their fair values at the acquisition date, except some equipment recorded at $50 000 below its fair value with a related accumulated depreciation of $80 000. Assume the equipment has not been revalued in the subsidiaries accounts. Also, Dean Ltd identified at acquisition date a contingent liability related to a lawsuit where Lewis Ltd was sued by a former supplier and attached a fair value of $40 000 to that liability. The previous held interest by Dean Ltd in Lewis Ltd (ie 20% of the issued shares) was recognised by in Dean Ltd.’s accounts at the fair value at acquisition date of $250 000. Dean Ltd incurred $15 000 in acquisition related costs including $10 000 in share issue costs.…
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?
On 1 July 2021, James Ltd acquired all the issued shares of Dean Ltd for $350,000. At this date, the financial statements of Dean Ltd showed the following: $ Share capital 270,000 Retained earnings 26,500 General Reserve 8,800 Total equity 305,300 Goodwill 25,000 At acquisition date, all the net identifiable assets and liabilities in Dean Ltd were recorded at amounts equal to their fair value except for: Asset Carrying amount ($) Fair Value ($) Inventories 15,000 18,000 Plant (cost $400,000) 210,000 220,000 The Plant was calculated to have a further life of 5 years, and was depreciated on a straight-line basis. All inventory was sold by 30 June 2020. Assume 30% tax rate Required: Prepare the acquisition analysis at 1 July 2021. Prepare the consolidation entries at acquisition date, 1 July 2021. Include narrations for each entry. Prepare the consolidation worksheet as at 1 July 2021. Prepare a Balance sheet for the reporting Group, James Ltd as at 1 July 2021 in narrative format.
Presidio’s appraisal of Mason's fair values deemed three accounts to be undervalued: Inventory by $8,350, Land by $16,000, and Buildings by $30,200. Presidio plans to maintain Mason’s separate legal identity and to operate Mason as a wholly owned subsidiary. Required: Prepare Presidio's journal entries to record its acquisition of Mason, related professional fees paid, and stock acquisition costs. Separately determine each individual amount that Presidio Company would report in its consolidated balance sheet following the acquisition of Mason. Include in Presidio's retained earnings any adjustments to income accounts from part (a). To verify the answers found in part (b), adjust Presidio's column of accounts for the journal entries in part (a) and then prepare a worksheet to consolidate the balance sheets of these two companies at the acquisition date.
On December 31, Year 1, P Company obtains control over the net assets of S Company by purchasing 100% of the ordinary shares of S Company. P Company paid for the purchase by issuing ordinary shares with a fair value of $44,000. In addition, P Company paid $1,000 for professional fees to facilitate the transaction. The following information has been assembled just prior to the acquisition date: Show Transcribed Text Goodwill Plant assets (net) Current assets Shareholders' equity Long-term debt Current liabilities Show Transcribed Text (i) the acquisition method (ii) the new-entity method Carrying Amount $ 80,000 50.000 $130,000 $ 75,000 25,000 30.000 3 $130,000 ü P Company 3 Fair Value $ 38,000 90,000 55,000 $ 183,000 $ 29,000 30,000 Carrying Amount $ 20.000 15,000 $35.000 $18,000 7,000 10,000 S Company $35,000 Fair Value $ 22,000 26,000 14.000 $ 62,000 $ 8,000 10,000 Required (a) Prepare a consolidated statement of financial position for P Company and calculate the debt-to-equity ratio…
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…
a) Explain the concepts: Single Entity Concept, Control and Fair value. b) Paul acquired 75% of the share capital of Simon on 1 January 2011. On this date the net Assets of Simon were Tk. 80,000. The Non-controlling interest was calculated using the fair value method, which was calculated as Tk.40, 000 at the date of acquisition. At January 2013 the net assets of Simon were Tk. 120,000 and goodwill had been impaired by Tk. 10, 000. Required: What was the value of Non-controlling interest at 1 January 2013? What will be the accounting treatment of a non-controlling interest? c) On 30 September 2011, GHI purchased 100% of the ordinary share capital of JKL for Tk. 1.8 million. The book value of JKL's net assets at the date of acquisition was Tk. 1.35 million. A valuation exercise showed that the fair value of JKL'S property, plant and equipment at the date was 100,000 greater than book value and JKL immediately incorporated this revaluation into its own books. Required: Calculate goodwill…
If PROMDI Co., a new company would acquire the net assets of CARDO Co and SYANO Co. PROMDI Co will be issuing 30,000 shares to CARDO and 12,000 shares to SYANO. The following is the balance sheet of PROMDI Co, followed by the fair values and additional unpaid costs incurred by PROMDI in the acquisition: REQUIREMENTS:A. GoodwillB. Consolidated Total Assets at the date of acquisitionC. Consolidated Total Liabilities at the date of acquisitionD. Consolidated Equity at the date of acquisition

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Required: Prepare all the necessary consolidation journal entries at 31 December 20X5, the year-end. Note 1) Use the provided journal entry template to enter your answer. 2) Workings/calculations or narrations are NOT required.