bbhgfftd The following information relates to questions 1-6On 1 July 2020, Cindy Ltd acquired all the issued capital of Vida Ltd for a cash payment of $66,000 when the equity of Vida Ltd was:Share capital$31,000Retained earningsRevaluation surplus$5,000$8,000At 1 July 2020, all assets of Vida Ltd were fairly valued. Directors determined that goodwill would be impaired by 10% in 2021, 2022 and 2023 on itsoriginal value. Assume that there are no intra-group transactions or deferred tax consequences from 1 July 2020 to 30 June 2023. The financialstatements as at 30 June 2023 are provided in question 3 in the partially-completed consolidation worksheet. Tax rate is 30%. Reporting date is 30 June.Cindy Ltd has investment in other entities.

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Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 25E

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On 1 July 2019, Quick Buck Ltd took control of the assets and liabilities of Eldorado Ltd. Quick Buck Ltd issued 80,000 shares having a fair value of $2.40 per share in exchange for the net assets of Eldorado Ltd. The costs of issuing the shares by Quick Buck Ltd cost $1,600. At this date the statement of financial position of Eldorado Ltd was as follows: Carrying amount Fair value Machinery $ 40,000 $ 67,000 Fixtures & fittings 60,0000 68,000 Vehicles 35,000 35,000 Current assets 10,000 12,000 Current liabilities (16,000) (18,000) Total net assets $ 129,000 Share capital (80,000 shares at $1.00 per share) $ 80,000 General reserve 20,000 Retained earnings 29,000 Total equity 129,000 Required:Prepare the journal entries in the records of Quick Buck Ltd at 1 July 2019 for the acquisition.
On 1 July 2019, Brad Ltd acquired all of the assets and liabilities of Pitt Ltd. In exchange for these assets and liabilities, Brad Ltd issued 100 000 shares that at date of issue had a fair value of $5.20 per share. Costs of issuing these shares amounted to $1000. Legal costs associated with the acquisition of Pitt Ltd amounted to $1200. The asset and liabilities of Pitt Ltd at 1 July 2019 were as follows: Carrying amount Fair value Assets $ 2000 10000 64 000 320 000 $ 2000 10000 Cash Accounts receivable 68 000 232 000 Inventories Equipment Accumulated depreciation – equipment (96 000) 240 000 Patents 280 000 Liabilities (16 000) (64 000) Accounts payable (16000) (64 000) Debentures Required (a) Prepare the acquisition analysis at 1 July 2019 for the acquisition of Pitt Ltd by Brad Ltd.
On 1 July 2018 Cool Ltd purchased an 80% controlling interest in Sunny Ltd for a consideration of $350,000. On that date the pre-control equity of Sunny consisted of: Paid up capital $200 000 Retained profits $150 000 General reserve $ 50 000 Total equity $400 000 The net assets of Sunny Ltd were recorded at fair values. Relevant financial data for the two companies, for the year ending 30 June 2020, is provided on the worksheet below. Further information: During May 2019 Sunny Ltd sold inventory to Cool Ltd at a profit of $8,000. This inventory was sold by Cool Ltd to external parties during the month of July 2019. On 30 June 2020 Cool Ltd purchased from Sunny Ltd an item of equipment for $40,000. The equipment has a cost of $90,000 and a carrying amount of $28,000. The equipment has a remaining useful life of 4 years and a residual value of zero. Consolidation worksheet as at 30 June 2020 Cool Sunny Sum Eliminations…
On 1 November 2020, Bermuda Ltd acquired all the assets and liabilities (other than cash) of Triangle Ltd. The details on the assets and liabilities of Triangle Ltd were as follows: Carrying Amount Fair Value Cash 30,000 30,000 Equipment 120,000 140,000 Accounts Receivable 25,000 25,000 Furniture 35,000 25,000 Accounts Payable 10,000 10,000 Income tax Payable 19,000 19,000 Annual Leave Payable 14,000 14,000 In addition to the above items, Triangle Ltd had an internally generated brand name with a fair value of $75,000 that was not recognized in its accounts. The consideration Bermuda Ltd paid to Triangle Ltd was $80,000 cash and 20,000 shares. The fair value of each Bermuda Ltd share is $10. Bermuda Ltd paid $20,000 in acquisition-related costs. The tax rate is 30%. Required: Conduct an acquisition analysis for Bermuda
On 1 November 2020, Bermuda Ltd acquired all the assets and liabilities (other than cash) of Triangle Ltd. The details on the assets and liabilities of Triangle Ltd were as follows: Carrying Amount Fair Value Cash 30,000 30,000 Equipment 120,000 140,000 Accounts Receivable 25,000 25,000 Furniture 35,000 25,000 Accounts Payable 10,000 10,000 Income tax Payable 19,000 19,000 Annual Leave Payable 14,000 14,000 In addition to the above items Triangle Ltd had an internally generated brand name with a fair value of $75,000 that was not recognised in its accounts. The consideration Bermuda Ltd paid to Triangle Ltd was $80,000 cash and 20,000 shares. The fair value of each Bermuda Ltd share is $10. Bermuda Ltd paid $20,000 in acquisition related costs. Tax rate is 30%.
On 1 January 2021, Black Ltd purchased all the shares in Beard Ltd. On 3 March 2021 Beard Ltddeclared and paid a dividend of $10,000 from pre-acquisition retained earnings. The requiredconsolidation entry on 30 June 2021 will result in: Group of answer choices An increase in retained earnings A decrease in the investment account None of the Answers A decrease in retained earnings
The balance sheet of the proprietorship of Jacob as of June 30, 2018 showed the following assets andliabilities:Cash P 40,000Accounts Receivable 53,600Inventory 88,000Equipment 65,600Accounts Payable 63,520The cash balance included a 200- share certificate of BW Resources common at acquisition cost of P 1,600; the current market quotation is 70 per share. Of the accounts receivable, an estimated 5% is considered to be doubtful of collection. Certain inventory items, booked at a cost of P22,960, are currently worth P16,000. Depreciation has not been recorded; the equipment, acquired two years ago, has a remaining useful life of about eight more years. Prepaid expense of P 12,800 and accrued expense of P 6,120 have not been properly recognized. Emily and Bert will join Jacob in a partnership. Jacob will invest the net assets of his business, after effecting the appropriate adjustments, and he will be allowed credit for goodwill equal to 10% of his initial capital credit. Emily and Bert…
On 1 July 2021, King Ltd acquired all the share capital of Queen Ltd for $1,800,000, and on that date Queen Ltd.'s equity were as follows: Share capital $1,200,000; Revaluation surplus $500,000 and Retained earnings $200,000. All the assets and liabilities of Queen Ltd. were recorded at fair value on 1 July 2021. During the financial year 2022, the following intragroup transactions occurred between King Ltd and Queen Ltd: Queen Ltd sold land to King Ltd for $400,000, which was $100,000 above cost. The land was still hold by King Ltd. King Ltd sold an equipment to Queen Ltd for $400,000. The carrying amount of equipment to King Ltd of $320,000. Both entities depreciate equipment at a rate of 10% p.a. on cost. Queen Ltd sold inventories costing $160,000 to King Ltd for $180,000. 1/4th of the inventories were still on hand with King Ltd. King Ltd received $15,000 of service revenue from Queen Ltd. Queen Ltd paid dividend of $30,000 and interest on loan of $8,000 to King Ltd. The tax rate…
On 1 July 2019, Quick Buck Ltd took control of the assets and liabilities of Eldorado Ltd. Quick Buck Ltdissued 80,000 shares having a fair value of $2.40 per share in exchange for the net assets of EldoradoLtd. The costs of issuing the shares by Quick Buck Ltd cost $1,600.At this date the statement of financial position of Eldorado Ltd was as follows: c Carrying amount Fair valueMachinery $40,000 $67,000Fixtures & fittings 60,000 68,000Vehicles 35,000 35,000 Current assets 10,000 12,000Current liabilities (16,000) (18,000)Total net assets…
On January 1, 2020, AMI Corporation purchased the non-cash net assets of Sheffield Ltd. for $8,087,900. Following is the statement of financial position of Sheffield Ltd. from the company's year-end the previous day: Sheffield Ltd.Statement of Financial PositionAs at December 31, 2019 Cash $630,000 Accounts receivable 554,000 Inventory 2,510,000 Property, plant, and equipment (net) 2,070,000 Land 2,570,000 $8,334,000 Accounts payable $324,000 Common shares 2,520,000 Retained earnings 5,490,000 $8,334,000 As part of the negotiations, AMI and Sheffield agreed on the following fair values for the items on Sheffield's statement of financial position: Accounts receivable $552,400 Inventory 2,265,000 Property, plant, and equipment 1,870,000 Land 3,620,000 Accounts payable 313,500 Prepare the journal entry on the books of AMI Corporation to record the purchase, assuming that instead of buying the net assets of…
Use the following information for the next three items: On January 2, 2019, the Statement of Financial Position of Pepper and Steak Company prior to the combination are: Pepper Co. Steak Co. Cash Inventories PPE, net Total Assets Current Liabilities Common stock, P100 par Additional Paid in capital Retained earnings Total Liabilities and Stockholders' equity The fair value of Steak Company's equipment is P153,000. Assume the following independent cases: P450,000 300,000 750,000 P1,500,000 A. P1,410,000 B. P1,419,600 P 90,000 150,000 450,000 810,000 P1,500,000 18. Assuming Pepper Company acquired 70% of the outstanding common stock of Steak Company for P105,000 and Non-controlling interest is measured at fair value of P61,000, how much is the goodwill (gain on acquisition)? C. P23,100 A. P(17,000) D. P(23,100) B. P17,000 or 19. Assuming Pepper Company acquired 80% of the outstanding common stock of Steak Company for P136,800 and non-controlling interest is measured at non-controlling…
On 3 September 2020, Debussy Ltd purchase 40,000 $1 listed equity shares of Red Copper Ltd at a price of $3 per share. Transaction costs were $5,000. At the year end of 31 December 2020, these shares were trading at $3.50. Debussy Ltd holds an active trading portfolio and the shares in Red Copper Ltd are acquired principally for the purpose of short-term profit. Required: Provide the accounting entries to account for initial and subsequent measurement of the share investment in Red Copper Ltd, in accordance with IFRS 9 / AASB 9 Financial Instruments. (narrations are not required). ANSWER HERE: Date Account Name Debit Credit

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