On 1 July 2020, P Ltd acquired 80% of the issued ordinary shares of date, the plant of S Ltd, with a cost price of N$250,000 and a carryin N$150,00, was revalued at N$200,000. At that stage, P Ltd also confi

On 1 July 2020, P Ltd acquired 80% of the issued ordinary shares of date, the plant of S Ltd, with a cost price of N$250,000 and a carryin N$150,00, was revalued at N$200,000. At that stage, P Ltd also confi

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 13RE

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Financial information at 30 June 2020 of Great Ltd and its subsidiary company, Wall Ltd, is shown below. At 1 July 2017, the date Great Ltd acquired its 80% shareholding in Wall Ltd, all the identifiable assets and liabilities of Wall Ltd were at fair value except for the following assets: Carrying amount Fair value Plant (cost $75,000) $49,000 $55,000 Land 29,000 37,000 The plant has an expected life of 10 years, with benefits being received evenly over that period. Differences between carrying amounts and fair values are adjusted on consolidation. The land on hand at 1 July 2017 was sold on 1 February 2018 for $40,000. Any valuation reserve in relation to the land is transferred on consolidation to retained earnings. Great Ltd uses the full goodwill method. The fair value of the non-controlling interest at 1 July 2017 was $31,500. Great Ltd Wall Ltd Sales revenue $ 316,000 $ 220,000…
Financial information at 30 June 2020 of Great Ltd and its subsidiary company, Wall Ltd, is shown below. At 1 July 2017, the date Great Ltd acquired its 80% shareholding in Wall Ltd, all the identifiable assets and liabilities of Wall Ltd were at fair value except for the following assets: Carrying amount Fair value Plant (cost $75,000) $49,000 $55,000 Land 29,000 37,000 The plant has an expected life of 10 years, with benefits being received evenly over that period. Differences between carrying amounts and fair values are adjusted on consolidation. The land on hand at 1 July 2017 was sold on 1 February 2018 for $40,000. Any valuation reserve in relation to the land is transferred on consolidation to retained earnings. Great Ltd uses the full goodwill method. The fair value of the non-controlling interest at 1 July 2017 was $31,500. Great Ltd Wall Ltd Sales revenue $ 316,000 $ 220,000…
Financial information at 30 June 2020 of Great Ltd and its subsidiary company, Wall Ltd, is shown below. At 1 July 2017, the date Great Ltd acquired its 80% shareholding in Wall Ltd, all the identifiable assets and liabilities of Wall Ltd were at fair value except for the following assets: Carrying amount Fair value Plant (cost $75,000) $49,000 $55,000 Land 29,000 37,000 The plant has an expected life of 10 years, with benefits being received evenly over that period. Differences between carrying amounts and fair values are adjusted on consolidation. The land on hand at 1 July 2017 was sold on 1 February 2018 for $40,000. Any valuation reserve in relation to the land is transferred on consolidation to retained earnings. Great Ltd uses the full goodwill method. The fair value of the non-controlling interest at 1 July 2017 was $31,500. Great Ltd Wall Ltd Sales revenue $ 316,000 $ 220,000…
Financial information at 30 June 2020 of Great Ltd and its subsidiary company, Wall Ltd, is shown below. At 1 July 2017, the date Great Ltd acquired its 80% shareholding in Wall Ltd, all the identifiable assets and liabilities of Wall Ltd were at fair value except for the following assets: Carrying amount Fair value Plant (cost $75,000) $49,000 $55,000 Land 29,000 37,000 The plant has an expected life of 10 years, with benefits being received evenly over that period. Differences between carrying amounts and fair values are adjusted on consolidation. The land on hand at 1 July 2017 was sold on 1 February 2018 for $40,000. Any valuation reserve in relation to the land is transferred on consolidation to retained earnings. Great Ltd uses the full goodwill method. The fair value of the non-controlling interest at 1 July 2017 was $31,500. Great Ltd Wall Ltd Sales revenue $ 316,000 $ 220,000…
Sydney Ltd purchased 20% of the shares in Melbourne Ltd on 1 July 2019 for $250,000. During the year Melbourne Ltd announced a netprofit of $60,000 and declared and paid dividends of $20,000.If Sydney Ltd accounted for the investment in Melbourne Ltd using the cost method how much revenue would Sydney Ltd have recogniseddue to its investment in Melbourne Ltd for the year ending 30 June 2020.
Financial information at 30 June 2020 of Great Ltd and its subsidiary company, Wall Ltd, is shown below. At 1 July 2017, the date Great Ltd acquired its 80% shareholding in Wall Ltd, all the identifiable assets and liabilities of Wall Ltd were at fair value except for the following assets: Carrying amount Fair value Plant (cost $75,000) $49,000 $55,000 Land 29,000 37,000 The plant has an expected life of 10 years, with benefits being received evenly over that period. Differences between carrying amounts and fair values are adjusted on consolidation. The land on hand at 1 July 2017 was sold on 1 February 2018 for $40,000. Any valuation reserve in relation to the land is transferred on consolidation to retained earnings. Great Ltd uses the full goodwill method. The fair value of the non-controlling interest at 1 July 2017 was $31,500. Great Ltd Wall Ltd Sales revenue $ 316,000 $ 220,000…
On 1 January 2020, Petre Ltd acquired a 60% interest in the issued share capital of Sanford Ltd, for a cash consideration of $6,000,000. On the acquisition date, the retained profits of Sandford Ltd were $3,000,000. The statement of financial position of the two companies for the year ended 31 December 2020 were as follow:- Petre Ltd Sanford Ltd ASSETS Property, plant and equipment 15,500 8,800 Investment in Sanford Ltd 6,000 - Inventories 5,000…
Ballet Pte Ltd acquired the following items of plant and Machinery, all from GST registered traders except paper shredder, which was purchased from a non registered trader for the quarter ended 31 March 2020. Description Cost (inclusive of 7% GST) Canon Printer $3,959 Paper Shredder $2,880 Boutique table $984.40 Machinery $11,877 Ballet Pte Ltd will claim its capital allowance to the maximum. Assuming the financial year ends on 30 June every year, determine the maximum capital allowance which can be claimed for the year of Assessment 2021 (to the nearest dollar). Assume paper shredder claimed by S19A, and Canon printer is not claimed under S19A. a. $6,567 b. $6,200 c. $4,967 d. $8,667
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
Trump Ltd acquired all the assets and liabilities of Bush Ltd on 30 June 2020. The purchase consideration was as follows: $1,000,000 in cash paid on acquisition date Two shares in Trump Ltd for every one share in Bush Ltd. Bush Ltd has 2,000,000 shares on issue at 30 June 2020. At 30 June 2013 Trump Ltd shares were quoted on the ASX at $2.50 per share. A deferred payment of $500,000 to be paid on 30 June 2014.Trump Ltd’s cost of capital is 7% which represents a one period present value factor of 0.9346 Should the price of Trump Ltd shares fall below $2.50 in the six months following the acquisition Trump Ltd is required to pay a cash contingent consideration. It is estimated that there is a 60% probability that the share price will fall to $2.45 in this period. Other information Trump Ltd incurred legal and other costs associated with the acquisition of $10,000 Trump Ltd incurred share issue costs of $4,000 The assets and liabilities acquired from Bush Ltd are as follows:…
On January 3, 2021, ABC acquired 60% of the outstanding shares of JKL an excess of cost over book value of P3,000,000. This excess was allocated to property, plant and equipment with 10 years of estimated useful life which half was already use. For the year ended December 31, 2022, JKL prepared the following condensed financial statements: Statement of Financial Position Current Assets P2,250,000 Liabilities P1,000,000 Plant and 12,500,000 Share Capital Property, Equipment, net 8,500,000 Accumulated Profits 5,250,000 Total P14,750,000 Total P14,750,000 图 Statement of Accumulated Profits Accumulate Profits, Beg P5,000,000 Sales P2,500,000 Cost of Goods Sold (1,250,000) (750,000) P500,000 Operating Expenses Net Income (250,000) | P5,250,000 Dividends Accumulated Profits, End JKL regularly sells merchandise to ABC at a price of 120% of cost. In 2021 and 2022, sales from JKL to ABC are as follows: Sales-2021 for P2,100,000 (inventory sold by ABC 1,800,000) ; Sales -2022 P1,200,000…
Trump Ltd acquired all the assets and liabilities of Bush Ltd on 30 June 2020. The purchase consideration was as follows: • $1,000,000 in cash paid on acquisition date • Two shares in Trump Ltd for every one share in Bush Ltd. Bush Ltd has 2,000,000 shares on issue at 30 June 2020. At 30 June 2013 Trump Ltd shares were quoted on the ASX at $2.50 per share. • A deferred payment of $500,000 to be paid on 30 June 2014.Trump Ltd’s cost of capital is 7% which represents a one period present value factor of 0.9346 • Should the price of Trump Ltd shares fall below $2.50 in the six months following the acquisition Trump Ltd is required to pay a cash contingent consideration. It is estimated that there is a 60% probability that the share price will fall to $2.45 in this period. Other information - Trump Ltd incurred legal and other costs associated with the acquisition of $10,000 - Trump Ltd incurred share issue costs of $4,000 The assets and liabilities acquired from Bush Ltd are as…