E3.5 Acquisition analysis, including fair value adjustment for plant and equipment(Section 3.6.2)On 1 October 20XO, EF Ltd acquired all the issued ordinary shares of GH Ltd. The terms ofthe acquisition agreement specified that EF Ltd must pay the existing shareholders of GH Ltd$1.5million immediately and a further $1.5million on 30 September 20X1. The incrementalcost of short-term finance to EF Ltd is 10% p.a. At acquisition date, the issued capital andreserves of GH Ltd were as follows:Issued capital1 200000Retained eamings 1/10/20X01400000At 1 October 20xO, the plant and equipment of GH Ltd had a carrying amount that was$150000 less than its fair value. The company income tax rate is 30%.REQUIRED(a) Prepare the general journal entries for the accounting records of EF Ltd to record:(i) the investment in GH Ltd on 1 October 20X0(ii) the cash payment of the $1500 000 on 30 September 20X1.

On 01.10.20X0, EF Ltd. acquired all the issued ordinary shares of GH Ltd. Purchase consideration =…

Answered: E3.5 Acquisition analysis, including…

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 December 18, 2020, Stephanie Corporation acquired 100 percent of a Swiss company for 4.022 million Swiss francs (CHF), which is indicative of book and fair value. At the acquisition date, the exchange rate was $1.00 = CHF 1. On December 18, 2020, the book and fair values of the subsidiary’s assets and liabilities were as follows: Cash CHF 822,000 Inventory 1,322,000 Property, plant, and equipment 4,022,000 Notes payable (2,144,000 ) Stephanie prepares consolidated financial statements on December 31, 2020. By that date, the Swiss franc has appreciated to $1.10 = CHF 1. Because of the year-end holidays, no transactions took place prior to consolidation. Determine the translation adjustment to be reported on Stephanie’s December 31, 2020, consolidated balance sheet, assuming that the Swiss franc is the Swiss subsidiary’s functional currency. What is the economic relevance of this translation adjustment? Determine the remeasurement gain or loss…
On December 18, 2020, Stephanie Corporation acquired 100 percent of a Swiss company for 4.004 million Swiss francs (CHF), which is indicative of book and fair value. At the acquisition date, the exchange rate was $1.00 = CHF 1. On December 18, 2020, the book and fair values of the subsidiary’s assets and liabilities were as follows: Cash CHF 804,000 Inventory 1,304,000 Property, plant, and equipment 4,004,000 Notes payable (2,108,000 ) Stephanie prepares consolidated financial statements on December 31, 2020. By that date, the Swiss franc has appreciated to $1.10 = CHF 1. Because of the year-end holidays, no transactions took place prior to consolidation. Determine the translation adjustment to be reported on Stephanie’s December 31, 2020, consolidated balance sheet, assuming that the Swiss franc is the Swiss subsidiary’s functional currency. What is the economic relevance of this translation adjustment? Determine the remeasurement gain or loss…
Determine cost of acquisition
On December 18, 2020, Stephanie Corporation acquired 100 percent of a Swiss company for 4.006 million Swiss francs (CHF), which is indicative of book and fair value. At the acquisition date, the exchange rate was $1.00 = CHF 1. On December 18, 2020, the book and fair values of the subsidiary's assets and liabilities were as follows: Cash CHF Inventory Property, plant, and equipment Notes payable 806,000 1,306,000 4,006,000 (2,112,000) Stephanie prepares consolidated financial statements on December 31, 2020. By that date, the Swiss franc has appreciated to $1.10 = CHF 1. Because of the year-end holidays, no transactions took place prior to consolidation. a. Determine the translation adjustment to be reported on Stephanie's December 31, 2020, consolidated balance sheet, assuming that the Swiss franc is the Swiss subsidiary's functional currency. What is the economic relevance of this translation adjustment? b. Determine the remeasurement gain or loss to be reported in Stephanie's 2020…
Dhapa
16
Qq.1.
q20. the goodwill reported at acquisition date is:
During the current year DTB intended to acquired 80% of Fuji Sdn Bhd (FSB)’s 40,000 ordinary share capital for a consideration of RM3.50 cash per share. The fair value of the non-controlling interest was RM50,000 and the fair value of the net assets acquired was RM145,000. DTB had successfully acquired FSB on 1.1.2022. Calculate the goodwill on acquisition of FSB and show the record in the consolidated financial statements.
V6. A company purchases land, building and equipment for $1,500,000. An independent appraisal shows that the best available indications of fair value at the time of purchase are: land: $760,000; building: $540,000; and equipment: $320,000. The purchase is financed through long-term debt. Required: Prepare the journal entry to record the purchase Prepare the journal entry to record the purchase:
D1.
Problem 6. Sales and Leaseback On Januar y 1 20х1, Entity sold building to Entity and a simultaneously leased it back. Additional information follows : Fair value of building 1,000,000 Carrying amount of building 800,000 Remaining useful life of building 10 years Lease Term 5 years Annual rent payable at the end of each year 100,000 Implicit interest rate equal to market rate 12% The transfer qualifies as a sale. Requirements (Independent cases) : а. If the sales price is P1,000,000 which is equal to fair value compute t he following under the seller-lessee accounting i. Lease liability ii. Right of use Asset iii. Gain or Loss iv. Journal entries on January 1, 20x1 b. If the sales price is P1,000,000 which is equal to fair value compute the following under the buyer-lessor acco unting i. Gross Investment ii. Net Investment iii. Unearned Interest Income iv. Journal entries on January 1, 20x1 c. Same requirements in a and b but the sales price is P1,100,000 which is above the fair value…

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