Calculate and enter the amount of goodwill
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On 1 July 2014 Chloe Ltd acquired all the shares in Lola Ltd for $955,000. At this date the shareholders’’ equity of Lola Ltd consisted of
|
Share capital |
$225,000 |
|
General reserve |
$196,000 |
|
Retained earnings 1/7/2014 |
$205,000 |
At 1 July 2014, the carrying amounts of all identifiable assets of Lola Ltd were equal to fair value with one exception. An item of Plant has a cost of $125,000 and an
An impairment loss of $88,000 relating to
Calculate and enter the amount of goodwill in the answer block below:
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- On 1 July 2014 Padma Ltd acquires 25 per cent of the issued capital of Jamuna Ltd for a cash consideration of $360 000. At the date of acquisition, the shareholders’ equity of Jamuna Ltd is:Share capital $450 000Retained earnings $300 000Total shareholders’ equity 750 000 Additional information• On the date of acquisition, buildings have a carrying amount in the accounts of Jamuna Ltd of $240 000 and a market value of $300 000. The buildings have an estimated useful life of 10 years after 1 July 2014.• For the year ending 30 June 2015 Jamuna Ltd records an after-tax profit of $90 000, from which it pays a dividend of $30 000.• For the year ending 30 June 2016 Jamuna Ltd records an after-tax profit of $300 000, from which it pays a dividend of $150 000.• Assume a tax rate of 30% is assumed Please answer: Apply equity method of accounting to:(a) Calculate the amount of goodwill at the date of acquisition (b) Prepare the journal entries for the year ending 30 June 2015 (c) Prepare the…On 1 July 2014 Padma Ltd acquires 25 per cent of the issued capital of Jamuna Ltd for a cash consideration of $360 000. At the date of acquisition, the shareholders’ equity of Jamuna Ltd is: Share capital $450 000 Retained earnings $300 000 Total shareholders’ equity 750 000 Additional information On the date of acquisition, buildings have a carrying amount in the accounts of Jamuna Ltd of $240 000 and a market value of $300 000. The buildings have an estimated useful life of 10 years after 1 July For the year ending 30 June 2015 Jamuna Ltd records an after-tax profit of $90 000, from which it pays a dividend of $30 For the year ending 30 June 2016 Jamuna Ltd records an after-tax profit of $300 000, from which it pays a dividend of $150 Assume a tax rate of 30% is assumed Required Apply equity method of accounting to: Calculate the amount of goodwill at the date of acquisition Prepare the journal entries for the year ending 30 June 2015 Prepare the…On 1 July 2019 Sugar Ltd acquired 90% of the shares of Glider Ltd for $565 240. At this date the equity of Glider Ltd consisted of share capital of $370 000 and retained earnings of $190 000. All the identifiable asset and liabilities of Glider Ltd were recorded at amounts equal to fair value except for: Carrying amount Fair Value Land $180 000 $200 000 Plant (cost $380 000) $300 000 $330 000 Inventories $25 000 $35 000 The plant was considered to have a further 10-year life. All the inventory was sold by 30 June 2020. The tax rate is 30%. Sugar Ltd uses the partial goodwill method. During the 2019–20 period Glider Ltd recorded a profit of $30 000. Required Prepare the consolidation worksheet entries for the preparation of the consolidated financial statements of Sugar Ltd at 30 June 2020.
- On 1 July 2014 Padma Ltd acquires 25 per cent of the issued capital of Jamuna Ltd for a cash consideration of $360 000. At the date of acquisition, the shareholders’ equity of Jamuna Ltd is: Share capital $450 000 Retained earnings $300 000 Total shareholders’ equity 750 000 Additional information On the date of acquisition, buildings have a carrying amount in the accounts of Jamuna Ltd of $240 000 and a market value of $300 000. The buildings have an estimated useful life of 10 years after 1 July 2014. For the year ending 30 June 2015 Jamuna Ltd records an after-tax profit of $90 000, from which it pays a dividend of $30 000. For the year ending 30 June 2016 Jamuna Ltd records an after-tax profit of $300 000, from which it pays a dividend of $150 000. Assume a tax rate of 30% is assumed Required Apply equity method of accounting to: (a)Calculate the amount of goodwill at the date of acquisition…On 1 July 2014 Padma Ltd acquires 25 per cent of the issued capital of Jamuna Ltd for a cash consideration of $360 000.At the date of acquisition, the shareholders’ equity of Jamuna Ltd is:Share capital $450 000Retained earnings $300 000Total shareholders’ equity 750 000Additional information• On the date of acquisition, buildings have a carrying amount in the accounts of Jamuna Ltd of $240 000 and a market value of $300 000. The buildings have an estimated useful life of 10 years after 1 July 2014.• For the year ending 30 June 2015 Jamuna Ltd records an after-tax profit of $90 000, from which it pays a dividend of $30 000.• For the year ending 30 June 2016 Jamuna Ltd records an after-tax profit of $300 000, from which it pays a dividend of $150 000.• Assume a tax rate of 30% is assumedOn 1 July 2014 Padma Ltd acquires 25 per cent of the issued capital of Jamuna Ltd for a cash consideration of $360 000. At the date of acquisition, the shareholders’ equity of Jamuna Ltd is: Share Capital $450,000 Retained Earnings $300,000 Total Shareholders Equity $750,000 Additional information On the date of acquisition, buildings have a carrying amount in the accounts of Jamuna Ltd of $240 000 and a market value of $300 000. The buildings have an estimated useful life of 10 years after 1 July 2014. For the year ending 30 June 2015 Jamuna Ltd records an after-tax profit of $90 000, from which it pays a dividend of $30 000. For the year ending 30 June 2016 Jamuna Ltd records an after-tax profit of $300 000, from which it pays a dividend of $150 000. Assume a tax rate of 30% is assumed Required Apply equity method of accounting to: (a) Calculate the amount of goodwill at the date of acquisition (b)…
- On 1 July 2014 Padma Ltd acquires 25 per cent of the issued capital of Jamuna Ltd for a cash consideration of $360 000. At the date of acquisition, the shareholders’ equity of Jamuna Ltd is:Share capitalRetained earningsTotal shareholders’ equityAdditional information$450 000 $300 000 750 000• On the date of acquisition, buildings have a carrying amount in the accounts of Jamuna Ltd of $240 000 and a market value of $300 000. The buildings have an estimated useful life of 10 years after 1 July 2014.• For the year ending 30 June 2015 Jamuna Ltd records an after-tax profit of $90 000, from which it pays a dividend of $30 000.• For the year ending 30 June 2016 Jamuna Ltd records an after-tax profit of $300 000, from which it pays a dividend of $150 000.• Assume a tax rate of 30% is assumedRequiredApply equity method of accounting to:(a) Calculate the amount of goodwill at the date of acquisition (3 marks) (b) Preparethejournalentriesfortheyearending30June2015(3marks) (c) Prepare the…On 1 January 2011, Berardo Ltd acquired 25% of the ordinary issued share capital of Ricky Ltd for $750 000. This investment gave rise to significant influence. The share capital and reserves of Ricky Ltd at 1 January 2011 were: Share capital 800,000 General reserve 500,000 Retained earnings 550,000 Total 1,850,000 All the identifiable net assets of Ricky Ltd were stated at fair value at the date of acquisition except for a building whose carrying value was $100 000 less than the fair value. Implicit goodwill arising on Berardo's acquisition of Ricky was: A) $262,500 B) $270,000 C) $287,500 D) $300,000Molokomme Limited acquired all the assets and liabilities of Mashiane Limited at 1 January 2016 for R195 000. Thestatement of financial position for Mashiane Limited was presented as follows at acquisition date:Mashiane LimitedStatement of financial position as at 1 January 2016R'000AssetsProperty, plant and equipment70Inventory60Accounts receivable40Total assets170Capital and reservesShare capital80Retained earnings70Shareholders’ equity150Accounts payables20Total equity and liabilities170Molokomme Limited considered the fair values of the assets and liabilities of Mashiane Limited to be equal to theircarrying amounts in the statement of financial position of Mashiane Limited at that date except for property, plant andequipment which was estimated at R100 000.What is the amount of goodwill (if any) that Molokomme Limited acquired in Mashiane Limited at 1 January 2016?Select one:a.R45 000b.R30 000c.R15 000d.R25 000
- 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 2022, Birds Ltd acquired all the issued shares of Tokyo Ltd for $174 800. At this date the equity of Tokyo Ltd consisted of share capital of $80 000 and retained earnings of $68 800. All the identifiable assets and liabilities of Tokyo Ltd were recorded at amounts equal to fair value except for the following. Carrying amount Fair value Patent $60 000 $72 000 Plant (cost $80 000) 40 000 48 000 Inventories 21 600 28 000 The patent was considered to have an indefinite life. It was estimated that the plant had a further life of 10 years, and was depreciated on a straight-line basis. All the inventories were sold by 30 June 2023. In May 2023, Tokyo Ltd transferred $20 000 from the retained earnings on hand at 1 July 2022 to a general reserve. In June 2023, Tokyo Ltd conducted an impairment test on the patent and on the goodwill acquired. As a result, the goodwill was considered to be impaired by $1200. The tax rate is 30%. 1.Required Prepare the acquisition analysis at 1 July…On 1 July 2021 Salzburg Ltd acquired the shares of Vienna Ltd for $60 000. At acquisition date, the capital of Vienna Ltd consisted of 44 000 ordinary shares each fully paid at $1. There were retained earnings of $4 000. All the identifiable assets and liabilities of Vienna Ltd were recorded at amounts equal to fair value except for: Carrying Fair Amount Value $12 000 Inventory Machinery (cost $100 000) $15.000 80 000 82 000 Land 60 000 70 000 Salzburg Ltd Balance Sheet as at 1 July 2021 Share capital $134 000 Retained earnings $41 400 $15 400 Cash at bank $100 000 Land $60 000 Investment in Wayne Ltd
