A Ltd acquired business of B Ltd. The Assets and Liabilities of B Ltd. were taken over at an agreed value of Rs. 82,50,000 and Rs. 65,00,000 respectively. A Ltd. agreed to issue 75,000 equity shares of Rs. 10 each fully paid and 10% 50,000 Preference shares of Rs. 10 each fully paid to the equity shareholders and preference shareholders of B Ltd. respectively. The Realization expenses of Rs. 25,000 were paid by the Transferee Company. The Capital Reserve account will be credited by Rs.

A Ltd acquired business of B Ltd. The Assets and Liabilities of B Ltd. were taken over at an agreed value of Rs. 82,50,000 and Rs. 65,00,000 respectively. A Ltd. agreed to issue 75,000 equity shares of Rs. 10 each fully paid and 10% 50,000 Preference shares of Rs. 10 each fully paid to the equity shareholders and preference shareholders of B Ltd. respectively. The Realization expenses of Rs. 25,000 were paid by the Transferee Company. The Capital Reserve account will be credited by Rs.

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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2. Tinuno Co. declared 10,000 shares held as investment in carrying amount of P2,000,000, and fair values of P1,600,000 on associate as property dividends. The investment has a date of declaration, P2,200,000 at the end of the reporting associate as property dividends. The investment hac carrying amount of P2,000,000, and fair values of P1,600,000 on date of declaration, P2,200,000 at the end of the reporting period and P1,900,000 on the date of distribution. Cost to distribute is zero. Requirement: Provide the journal entries on the dates of declaration, record and distribution.
Alex Ltd. Is taken over by Billy Ltd. On the following terms: The assets and liabilities of Alex Ltd, shall be valued at P3,000,000 and P1,000,000. P5,000 shall be paid in cash and the balance of consideration shall be discharged by issue of shares of P10 each at a premium of 50%. Show the Calculation of purchase consideration and state the number of shares issued to the shareholders of Alex Ltd.
The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares eachvalued at $1.50. The summary statement of the financial position of the subsidiary company immediatelyfollowing the acquisition is:Fair value of assets acquired $2,640,000Fair value of liabilities acquired $720,000Total shareholders’ equity of the subsidiary company $800,000Retained earnings of the subsidiary company $1,120,000Required:(b) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition (c) Pass the necessary consolidation entry to eliminate the subsidiary by the parent company (d) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchase consideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50.
The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares eachvalued at $1.50. The summary statement of the financial position of the subsidiary company immediatelyfollowing the acquisition is:Fair value of assets acquired $2,640,000Fair value of liabilities acquired $720,000Total shareholders’ equity of the subsidiary company $800,000Retained earnings of the subsidiary company $1,120,000Required:(d) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchaseconsideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50
The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares eachvalued at $1.50. The summary statement of the financial position of the subsidiary company immediatelyfollowing the acquisition is:Fair value of assets acquired $2,640,000Fair value of liabilities acquired $720,000Total shareholders’ equity of the subsidiary company $800,000Retained earnings of the subsidiary company $1,120,000 (a) Pass the necessary journal entry to record the acquisition(b) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition(c) Pass the necessary consolidation entry to eliminate the subsidiary by the parent company(d) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchaseconsideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50
The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares eachvalued at $1.50. The summary statement of the financial position of the subsidiary company immediatelyfollowing the acquisition is:Fair value of assets acquired $2,640,000Fair value of liabilities acquired $720,000Total shareholders’ equity of the subsidiary company $800,000Retained earnings of the subsidiary company $1,120,000Required:(a) Pass the necessary consolidation entry to eliminate the subsidiary by the parent company (b) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchase consideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50
The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares each valued at $1.50. The summary statement of the financial position of the subsidiary company immediately following the acquisition is: Fair value of assets acquired. $2,640,000Fair value of liabilities acquired. $720,000Total shareholders’ equity of the subsidiary company $800,000Retained earnings of the subsidiary company $1,120,000 (d) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchase consideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50
P Limited obtained control with the acquisition of an 80% equity interest in the share capital of S Limited on 1 January 20.9 and paid R100 000 cash and transferred 10 000 ordinary equity shares in W Limited, with a market value of R4 per share, to settle the purchase price of R140 000 for the acquisition of an 80% interest.Identify the correct journal entries to be made in the separate accounting records of P Ltd Select one: a. Dr Investment in S Ltd R140 000 ,Cr Bank R100 000 Cr Investment in W Ltd R40 000 b. Dr Investment in S Ltd R140 000, Dr Investment in W Ltd R40 00, Cr Bank R180 000 c. Dr Investment in S Ltd R110 00 ,Cr Bank R11 000 d. Dr Investment in S Ltd R140 000, Cr Bank R140 000
P Limited obtained control with the acquisition of an 80% equity interest in the share capital of S Limited on 1 January20.9 and paid R100 000 cash and transferred 10 000 ordinary equity shares in W Limited, with a market value of R4 pershare, to settle the purchase price of R140 000 for the acquisition of an 80% interest.How much will be recorded as the Investment in S Ltd in the separate financial statements of S Ltd?Select one:a.R100 000b.R110 000c.R140 000d.R80 000
A Limited acquired control with the acquisition of an 80% interest in B Limited for R1 100 000 on 1 January 20.8. On this date the share capital of B Limited was R200 000 consisting of 200 000 ordinary shares and the retained earnings amounted to R800 000. The fair value of the net assets of B Limited amounted to R1 000 000 on 1 January 20.8. The market value of the shares of B Limited on 1 January 20.8 amounted to R7 per share. Non-controlling interests in the acquiree measured at fair value (full goodwill method) The Non- controlling interest will amount to________. Select one: a. R80 000 b. R280 000 c. R300 000 d. R200 000
A Ltd pays $90,000 to acquire 90% of the shares of B Ltd on 1 January 20x4 when B Ltd was incorporated with share capital of $100,000 (comprising 100,000 ordinary shares at $1 each). On 1 January 20x8, when the fair value of B Ltd's identifiable net assets was represented by share capital of $100,000 and retained profit of $40,000 and A Ltd's shares are traded at $1.50 per share, A Ltd sells 80% of the shares (and retains 10% of the shares) of B Ltd for cash consideration of $120,000. The 10% shareholding in B Ltd is accounted for as “held-for-trading" securities and the shares are traded at $2 per share on 31 December 20x8. In this case, the fair value gain in A Ltd's consolidated financial statements is: 1. $6,000. 2. None of the listed choices. 3. $10,000. 4. $5,000. $0.