The following information is relevant:1)The fair value of Danute's net assets differed from its carrying values at 1July 2015. Plant was $8 million in excess of its net book value. Plant had 4years remaining at the date of acquisition. The group depreciation policy isto charge depreciation on a proportionate basis and should be included incost of sales. No adjustment was made for this in Danute's financialstatements.2)Ausrahas a policy of revaluing land and buildings to fair value (as allowedper IAS 16) at each reporting date. Danute accounts for its non-currentassets at historical cost. At the acquisition date, Danute's land and buildingshad a fair value of $2 million greater than their book value and at 31December 2015 this had increased by a further $400,000 (ignore anyadditional depreciation).3)Ausra's policy is to value the non-controlling interest at fair value at thedate of acquisition. The fair value of the non-controlling interests at the dateof acquisition is $7.3 million.4)An impairment test carried out on 31 December 2015 concluded thatconsolidated goodwill was impaired by $780,000.5)On 1 July 2015, Ausratransferred an item of machinery to Danute. Themachine had originally cost $1.2 million on 1 July 2010, and it wastransferred to Danute for $1 million. Machines have a useful life of ten years.The Useful Economic Life has not changed as a result of the transfer.6)During the year Ausrasold goods to Danute at a transfer price of$250,000. All of the goods were sold on outside the group by the year-end.The current accounts of Ausra and Danute werereconciled at the year endwith Danute owing $50,000.Required: Calculate the goodwill arising on the acquisition of Danuteww wm On 1 July 2015, Ausra purchased 75% of Danute by way of a shareexchange of two new shares in Ausra for every three purchased inDanute plus an immediate cash payment of $11,160,000. Ausra's share priceat the acquisition date was $4.70. Only the cash element of the considerationhas been recorded. On the same date, Ausra purchased $5,000,000 ofDanute's 10% loan notes at par. The summarised financial statements ofboth companies are as follows:Statement of Comprehensive Income for the year ended 31December 2015Rectular SnipAusraS 000DanuteS 0Profit for the year18,4005,200Statements of Financial Position at 31 December 2015AusraS 000Danute$ 00Non-current assets:Property, plant and equipment38,64016,000Investments16,28054,92016,000Current assetsInventory11,2406,450Receivables13,6005,16030,0007,3552,19516,000BankTotal Assets84,92032,000Equity and liabilitiesOrdinary shares of $1 eachRetained earnings40,0004,00017,7208,800Revaluation reserve7,20064,92012,800Non-current liabilities10% loan notes10,000Current Liabilities20,00084,9209,20032,000Total Equity and Liabilities

It is an intangible asset of the company. Any amount paid in excess of the fair value of assets…

Answered: On 1 July 2015, Ausra purchased 75% of…

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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On 1 July 2015, Ausra purchased 75% of Danute by way of a share exchange of two new shares in Ausra for every three purchased in Danute plus an immediate cash payment of $11,160,000. Ausra’s share price at the acquisition date was $4.70. Only the cash element of the consideration has been recorded. On the same date, Ausra purchased $5,000,000 of Danute’s 10% loan notes at par. The summarised financial statements of both companies are as follows: Statement of Comprehensive Income for the year ended 31 December 2015 Ausra Danute $ 000 $ 000 Revenue 120,000 48,000 Cost of sales (84,000) (40,000) Gross profit 36,000 8,000 Operating expenses (11,900) (400) Profit from operations 24,100 7,600 Other income 300 - Finance costs - (1,200) Profit before tax 24,400 6,400 Income tax expense (6,000) (1,200) Profit for the year 18,400 5,200 The following information is relevant:…
On 1 July 2015, Ausra purchased 75% of Danute by way of a share exchange of two new shares in Ausra for every three purchased in Danute plus an immediate cash payment of $11,160,000. Ausra’s share price at the acquisition date was $4.70. Only the cash element of the consideration has been recorded. On the same date, Ausra purchased $5,000,000 of Danute’s 10% loan notes at par. The summarised financial statements of both companies are as follows: Statements of Financial Position at 31 December 2015 Ausra Danute $ 000 $ 000 Non-current assets: Property, plant and equipment 38,640 16,000 Investments 16,280 - 54,920 16,000 Equity and liabilities Ordinary shares of $1 each 40,000 4,000 Retained earnings 17,720 8,800 Revaluation reserve 7,200 - 64,920 12,800 Non-current liabilities 10% loan notes - 10,000 Current Liabilities 20,000 9,200 The following…
On 1 July 2015, Ausra purchased 75% of Danute by way of a share exchange of two new shares in Ausra for every three purchased in Danute plus an immediate cash payment of $11,160,000. Ausra’s share price at the acquisition date was $4.70. Only the cash element of the consideration has been recorded. On the same date, Ausra purchased $5,000,000 of Danute’s 10% loan notes at par. The summarised financial statements of both companies are as follows: Statement of Comprehensive Income for the year ended 31 December 2015 Ausra Danute $ 000 $ 000 Revenue 120,000 48,000 Cost of sales (84,000) (40,000) Gross profit 36,000 8,000 Operating expenses (11,900) (400) Profit from operations 24,100 7,600 Other income 300 - Finance costs - (1,200) Profit before tax 24,400 6,400 Income tax expense (6,000) (1,200) Profit for the year 18,400 5,200 Statements of Financial Position at 31…
On 1 July 2015, Ausra purchased 75% of Danute by way of a share exchange of two new shares in Ausra for every three purchased in Danute plus an immediate cash payment of $11,160,000. Ausra’s share price at the acquisition date was $4.70. Only the cash element of the consideration has been recorded. On the same date, Ausra purchased $5,000,000 of Danute’s 10% loan notes at par. The summarised financial statements of both companies are as follows: Statement of Comprehensive Income for the year ended 31 December 2015 Ausra Danute $ 000 $ 000 Revenue 120,000 48,000 Cost of sales (84,000) (40,000) Gross profit 36,000 8,000 Operating expenses (11,900) (400) Profit from operations 24,100 7,600 Other income 300 - Finance costs - (1,200) Profit before tax 24,400 6,400 Income tax expense (6,000) (1,200) Profit for the year 18,400 5,200 Statements of Financial Position at 31…
On 1 July 2015, Ausra purchased 75% of Danute by way of a share exchange of two new shares in Ausra for every three purchased in Danute plus an immediate cash payment of $11,160,000. Ausra’s share price at the acquisition date was $4.70. Only the cash element of the consideration has been recorded. On the same date, Ausra purchased $5,000,000 of Danute’s 10% loan notes at par. The summarised financial statements of both companies are as follows: Ausra Danute $ 000 $ 000 Revenue 120,000 48,000 Cost of sales (84,000) (40,000) Gross profit 36,000 8,000 Operating expenses (11,900) (400) Profit from operations 24,100 7,600 Other income 300 - Finance costs - (1,200) Profit before tax 24,400 6,400 Income tax expense (6,000) (1,200) Profit for the year 18,400 5,200 Ausra Danute $ 000 $ 000 Non-current assets: Property, plant and equipment 38,640 16,000…
On 1 July 2015, Ausra purchased 75% of Danute by way of a share exchange of two new shares in Ausra for every three purchased in Danute plus an immediate cash payment of $11,160,000. Ausra’s share price at the acquisition date was $4.70. Only the cash element of the consideration has been recorded. On the same date, Ausra purchased $5,000,000 of Danute’s 10% loan notes at par. The summarised financial statements of both companies are as follows: Statement of Comprehensive Income for the year ended 31 December 2015 Ausra Danute $ 000 $ 000 Revenue 120,000 48,000 Cost of sales (84,000) (40,000) Gross profit 36,000 8,000 Operating expenses (11,900) (400) Profit from operations 24,100 7,600 Other income 300 - Finance costs - (1,200) Profit before tax 24,400 6,400 Income tax expense (6,000) (1,200) Profit for the year 18,400 5,200 Statements of Financial Position at 31…
On 1 July 2015, Ausra purchased 75% of Danute by way of a share exchange of two new shares in Ausra for every three purchased in Danute plus an immediate cash payment of $11,160,000. Ausra’s share price at the acquisition date was $4.70. Only the cash element of the consideration has been recorded. On the same date, Ausra purchased $5,000,000 of Danute’s 10% loan notes at par. The summarised financial statements of both companies are as follows: Statement of Comprehensive Income for the year ended 31 December 2015 Ausra Danute $ 000 $ 000 Revenue 120,000 48,000 Cost of sales (84,000) (40,000) Gross profit 36,000 8,000 Operating expenses (11,900) (400) Profit from operations 24,100 7,600 Other income 300 - Finance costs - (1,200) Profit before tax 24,400 6,400 Income tax expense (6,000) (1,200) Profit for the year 18,400 5,200 Statements of Financial Position at 31…
On 1 July 2015, Ausra purchased 75% of Danute by way of a share exchange of two new shares in Ausra for every three purchased in Danute plus an immediate cash payment of $11,160,000. Ausra’s share price at the acquisition date was $4.70. Only the cash element of the consideration has been recorded. On the same date, Ausra purchased $5,000,000 of Danute’s 10% loan notes at par. The summarised financial statements of both companies are as follows: Statement of Comprehensive Income for the year ended 31 December 2015 Ausra Danute $ 000 $ 000 Revenue 120,000 48,000 Cost of sales (84,000) (40,000) Gross profit 36,000 8,000 Operating expenses (11,900) (400) Profit from operations 24,100 7,600 Other income 300 - Finance costs - (1,200) Profit before tax 24,400 6,400 Income tax expense (6,000) (1,200) Profit for the year 18,400 5,200 Statements of Financial Position at 31…
On 1 July 2015, Monageng Limited concluded an agreement to purchase 75% of the ordinary shares in Selongo Limited.The terms of the purchase agreement include, among other things, the following• Monageng Limited will settle for the 75% of the ordinary shares by paying cash of R200 000 in addition to issuing 100000 of its own 10% preference shares to the owners of the 75% ordinary shares on 30 September 2015. The price ofthe10% preference shares on 30 September 2015 was R2.50 each.• Monageng Limited will only be able to appoint its directors to the board of Selongo Limited on 1 August 2015 after theyear end date of Selongo Limited which is on 31 July 2015. All the ordinary shares of Selongo Limited are entitled to voteat the company’s AGM but preference shares are not entitled to vote.Which of the following statements are true?(i) Monageng Limited is the acquiree(ii) Selongo Limited is the acquiree(iii) Monageng Limited is the acquirer(iv) Selongo Limited is the acquirerSelect one:a.(i)…
On 1 July 2015, Ausra purchased 75% of Danute by way of a share exchange of two new shares in Ausra for every three purchased in Danute plus an immediate cash payment of $11,160,000. Ausra’s share price at the acquisition date was $4.70. Only the cash element of the consideration has been recorded. On the same date, Ausra purchased $5,000,000 of Danute’s 10% loan notes at par. The summarised financial statements of both companies are as follows: Statement of Comprehensive Income for the year ended 31 December 2015 Ausra Danute $ 000 $ 000 Revenue 120,000 48,000 Cost of sales (84,000) (40,000) Gross profit 36,000 8,000 Operating expenses (11,900) (400) Profit from operations 24,100 7,600 Other income 300 - Finance costs - (1,200) Profit before tax 24,400 6,400 Income tax expense (6,000) (1,200) Profit for the year 18,400 5,200 Statements of Financial Position at 31…
On 1 July 2015, Monageng Limited concluded an agreement to purchase 75% of the ordinary shares in Selongo Limited. The terms of the purchase agreement include, among other things, the following: • Monageng Limited will settle for the 75% of the ordinary shares by paying cash of R200 000 in addition to issuing 100 000 of its own 10% preference shares to the owners of the 75% ordinary shares on 30 September 2015. The price of the10% preference shares on 30 September 2015 was R2.50 each. • Monageng Limited will only be able to appoint its directors to the board of Selongo Limited on 1 August 2015 after the year end date of Selongo Limited which is on 31 July 2015. All the ordinary shares of Selongo Limited are entitled to vote at the company's AGM but preference shares are not entitled to vote. What is the value of the purchase consideration? Select one: O a. R200 000 O b. R300 000 O . R250 000 O d. R450 000
On 1 July 2015, Monageng Limited concluded an agreement to purchase 75% of the ordinary shares in Selongo Limited. The terms of the purchase agreement include, among other things, the following: Monageng Limited will settle for the 75% of the ordinary shares by paying cash of R200 000 in addition to issuing 100 000 of its own 10% preference shares to the owners of the 75% ordinary shares on 30 September 2015. The price of the10% preference shares on 30 September 2015 was R2.50 each. Monageng Limited will only be able to appoint its directors to the board of Selongo Limited on 1 August 2015 after the year end date of Selongo Limited which is on 31 July 2015. All the ordinary shares of Selongo Limited are entitled to vote at the company’s AGM but preference shares are not entitled to vote. What is the acquisition date of this business combination? Select one: a. 1 July 2015 b. 30 September 2015 c. 1 August 2015 d. 1 October 2015

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