On 1 July 2014 Padma Ltd acquires 25 per cent of the issued capital of Jamuna Ltd for a cash consideration of $360000.At the date of acquisition, the shareholders’ equity of Jamuna Ltd is: Share capital $450000 Retained earnings $300000 Total shareholders’ equity $750000 Additional information On the date of acquisition, buildings have a carrying amount in the accounts of Jamuna Ltd of $240000 and a market value of $300000. The buildings have an estimated useful life of 10 years after 1 July 2014. For the year ending 30 June 2015 Jamuna Ltd records an after-tax profit of $90000, from which it pays a dividend of $30000. For the year ending 30 June 2016 Jamuna Ltd records an after-tax profit of $300000, from which it pays a dividend of$150000. Assume a tax rate of 30% is assumed
On 1 July 2014 Padma Ltd acquires 25 per cent of the issued capital of Jamuna Ltd for a cash consideration of $360000.At the date of acquisition, the shareholders’ equity of Jamuna Ltd is: Share capital $450000 Retained earnings $300000 Total shareholders’ equity $750000 Additional information On the date of acquisition, buildings have a carrying amount in the accounts of Jamuna Ltd of $240000 and a market value of $300000. The buildings have an estimated useful life of 10 years after 1 July 2014. For the year ending 30 June 2015 Jamuna Ltd records an after-tax profit of $90000, from which it pays a dividend of $30000. For the year ending 30 June 2016 Jamuna Ltd records an after-tax profit of $300000, from which it pays a dividend of$150000. Assume a tax rate of 30% is assumed
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On 1 July 2014 Padma Ltd acquires 25 per cent of the issued capital of Jamuna Ltd for a cash consideration of $360000.At the date of acquisition, the shareholders’ equity of Jamuna Ltd is:
Share capital $450000
Total shareholders’ equity $750000
Additional information
- On the date of acquisition, buildings have a carrying amount in the accounts of Jamuna Ltd of $240000 and a market value of $300000. The buildings have an estimated useful life of 10 years after 1 July 2014.
- For the year ending 30 June 2015 Jamuna Ltd records an after-tax profit of $90000, from which it pays a dividend of $30000.
- For the year ending 30 June 2016 Jamuna Ltd records an after-tax profit of $300000, from which it pays a dividend of$150000.
- Assume a tax rate of 30% is assumed
Required
Apply equity method of accounting to:
(a)Calculate the amount of
(b)Prepare the
(c)Prepare the journal entries for the year ending 30 June 2016 of Jamuna Ltd
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