acquired 80% of the issued shares of Sinatra Ltd for $250,000. At that date, Sinatra Ltd's equity consisted of share capital of $200,000 and retained earnings of $300,000.
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- Petro Ltd acquired 60% of Carlos Ltd’s 500,000 R1 equity shares on 1st January 2019 for a consideration of R5 cash per share. At the date of acquisition, net assets and liabilities in Carlos Ltd were valued at R1,600,000 and the fair value of the non-controlling interest was R800,000.Required:1. Determine the acquisition date.2. Calculate goodwill or gain on bargain purchase if any using Proportionate of Net Assets Method3. Calculate goodwill or gain on bargain purchase if any using Fair Value MethodOn 1 July 2022, Dean Ltd acquired the remaining 80% of the issued shares of Lewis Ltd for shares in Dean Ltd with a fair value of $1 000 000. At that date, the financial statements of Lewis Ltd showed the following information. All the assets and liabilities of Lewis Ltd were recorded at amounts equal to their fair values at the acquisition date, except some equipment recorded at $50 000 below its fair value with a related accumulated depreciation of $80 000. Assume the equipment has not been revalued in the subsidiaries accounts. Also, Dean Ltd identified at acquisition date a contingent liability related to a lawsuit where Lewis Ltd was sued by a former supplier and attached a fair value of $40 000 to that liability. The previous held interest by Dean Ltd in Lewis Ltd (ie 20% of the issued shares) was recognised by in Dean Ltd.’s accounts at the fair value at acquisition date of $250 000. Dean Ltd incurred $15 000 in acquisition related costs including $10 000 in share issue costs.…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 2019, Brad Ltd acquired all 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 $1,000. Legal cost associated with the acquisition of Pitt Ltd amounted to $1,200.The assets and liabilities of Pitt Ltd at 1 July 2019 were as follows:Carrying Amount ($) Fair Value ($)AssetsCash 2,000 2,000Accounts receivable 10,000 10,000Inventory 64,000 68,000Equipment 320,000 232,000Accumulated depn - Equipment (96,000) -Patents 280,000 280,000LiabilitiesAccounts payable (16,000) (16,000)Debentures (64,000) (64,000)Required:a) Prepare the acquisition analysis at 1 July 2019 for the acquisition of Pitt Ltd by Brad Ltd.b) Prepare the journal entries in the records of Brad Ltd at 1 July 2019.Accounting at acquisition date by the acquirer 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 Cash $2000 $2000 Accounts receivable 10000 10000 Inventories…6. On December 31, 2019, Stefan company purchased for 30 per share all 300,000 of Elena company’s outstanding ordinary shares. On this date, the acquiree’s statement of financial position showed net assets of P7,500,000. Additionally, the fair value of the acquiree’s identifiable assets on this date was 600,000 in excess of carrying amount. In the statement of financial position, what amount should be reported as goodwill as a result ofthe acquisition?
- Dog Ltd acquired all the issued share capital of Fish Ltd on 1 July 2019 for cash $2,250,000. At the date of acquisition, all assets of Fish Ltd were recorded at fair value, except for land, which had a carrying amount of $1,000,000 and its fair value was $1,155,000. The recorded balances of equity in Fish Ltd as at 1 July 2019 were: Share capital $1,360,000 Retained earnings $ 170,000 $1,530,000 Present the acquisition analysisPOM acquired 80% of the share of SOM for $26,550 on 1 Jan 2019, the date of acquisition (DOA). At this date, the equity of SOM consisted of share capital of $15,000 and retained earnings of $12,250. At 1 Jan 2019, all the identifiable assets and liabilities of SOM were recorded at fair value except for the following: Carrying amount Fair value Plant $7,500 $10,000 The plant had a remaining useful life of 5 years with depreciation based on the straight-line method. The fair value of the non-controlling interest (NCI) in SOM on DOA was $6,000. Tax rate is 10%. On 1 Jan 2021, POM acquired 30% of the shares of AOM for $7,450. Significance influence on AOM was obtained as a result. At this date, AOM's equity consisted of the share capital of $7,500 and retained earnings of $11,250. AOM made a profit of $5,200 for the year ended 31 Dec 2021. The following intra-group or inter-entity transactions happened in the period from 1 Jan 2021 to 31 Dec 2021 1. On 1 Jan 2021, POM held an inventory of…On 1 July 2019, Michelle Ltd acquired all the issued shares of Tracy Ltd, paying $250 000 cash. At that date, the financial statements of Tracy Ltd showed the following information. Share Capital $100000 Retained Earnings 100000 All the assets and liabilities of Tracy Ltd were recorded at amounts equal to their fair values at the acquisition date, except some inventories recorded at $10 000 below their fair value. Also, Michelle Ltd identified at acquisition date a patent with a fair value of $40 000 that Tracy Ltd has not recorded in its own accounts. Required Prepare the acquisition analysis at 1 July 2019. Prepare the consolidation worksheet entries for Michelle Ltd’s group at 1 July 2019. Discuss how the answers for 1 and 2, above, would change if the Michelle Ltd paid only $200 000 cash for the shares in Tracy Ltd.
- On 1 July 2019, BPL Ltd acquired all of the assets and liabilities of HTC Ltd. In exchange for these assets and liabilities, BPL Ltd issued 100 000 shares that at date of issue had a fair value of $4.95 per share. Costs of issuing these shares amounted to $1050. Legal costs associated with the acquisition of HTC Ltd amounted to $1520. The asset and liabilities of HTC Ltd at 1 July 2019 were as follows: Carrying amountFair value Assets: Cash$12 000$20 000 Accounts receivable10 50012 000 Inventory64 00071 000 Equipment 320 000239 000 Accumulated depreciation – equipment(96 000)— Patents240 000270 000 Liabilities: Accounts payable(16 000)(20 000) Debentures(64 000)(69 000) REQUIRED: a. Prepare the acquisition analysis at 1 July 2019 for the acquisition of HTC Ltd by BPL Ltd.On 1st July, 2018 Murray Ltd acquired 70% of the share capital of Darling Ltd for $100,000,000. Equity of Darling Ltd at acquisition date was: Share Capital $ 60,000,000 General Reserve $ 20,000,000 Retained Earnings $ 10,000,000 All assets and liabilities of Darling Ltd were recorded at fair value on acquisition. Ignore Tax effects. Required: Complete the worksheet below using the partial goodwill method with the NCI measured at the proportionate share of the acquiree’s identifiable net assets. Elimination of Investment in Darling Ltd Darling Ltd (S) $,000 Murray Ltd (70% of Darling) (P) $,000 30% NCI $,000 Fair Value of consideration transferred Less: FV of identifiable assets acquired & liabilities assumed Share capital on acquisition date 60,000 General…ABC Ltd acquires 100 per cent of RedCarpet Ltd on 1 July 2021. ABC Ltd pays the shareholders of RedCarpet Ltd the following consideration. There are also legal fees of $95 000 involved in acquiring RedCarpet Ltd. On 1 July 2021 RedCarpet Ltd’s statement of financial position shows total assets of $300 000 and liabilities of $150 000. The fair value of the assets is $400 000. Question: Has any goodwill been acquired and, if so, how much? And discuss the potential for including associated legal fees into the cost of acquiring RedCarpet using appropriate accounting standard?