On 30 June 2019 Southside plc purchased 5,000 shares in ABC plc at £10.00 per share. On acquisition, Southside plc classified this investment as 'available-for-sale'. At 30 June 2020 the fair value of the instruments had increased to £14.00. At 30 June 2021 the fair value of the equity instruments had decreased to £13.00. All of the instruments were sold on 30 June 2021. No cividends were declared on those instruments during the time that they were held by Southside plc. At 30 June 2019 the only equity item was paid-up capital of £100,000. The applicable tax rate is 30 per cent. Required: Prepare an extract of the statement of comprehensive income and statement of changes in equity for the reporting period ending 30 June 2021 in which the reclassification adjustment for available for sale investment is detailed. You may show altermative methodology but do not show both methods.

What are the accounting ramifications of each of the three following situations involving the payment of contingent consideration in an acquisition? a. P Company issues 100,000 shares of its $50 fair value ($1 par) common stock as payment to buy S Company on January 1, 2015. P agrees to pay $100,000 cash two years later if S income exceeds an income target. The target is exceeded. b. P Company issues 100,000 shares of its $50 fair value ($1 par) common stock as payment to buy S Company on January 1, 2015. P agrees to issue 10,000 additional shares of its stock two years later if S income exceeds an income target. The target is exceeded. c. P Company issues 100,000 shares of its $50 fair value ($1 par) common stock as payment to buy S Company on January 1, 2015. P agrees to issue 5,000 additional shares two years later if the fair value of P shares falls below $50 per share. Two years later, the stock has a fair value below $50, and added shares are issued to S.

Brick Ltd acquired 80% of the shares in Mortar Ltd on 1 January 2019 for an initial consideration of £39,000,000 cash and a further £13,000,000 will be paid on 1 January 2021. On 1 January 2019, Mortar Ltd had retained earnings of £7,800,000 and the market price of its shares was £1.50 per share. The Statement of Financial Position of Brick Ltd and its subsidiary Mortar Ltd as at 31 December 2019 are as follows: Brick Ltd £000 Mortar Ltd £000 Non-current Assets: Property, plant and equipment at cost 65,000 52,000 Investment in Mortar Ltd 50,791 115,791 52,000 Current Assets: Inventories 3,900 10,400 Trade receivables: Brick Ltd 13,000 Other 20,800 9,100 Cash 2.600 27.300 32,500 84,500 Total Assets 143.091 Equity and Liabilities Еquity Ördinary Share Capital at £1 each 58,500 32,500 Revaluation Reserve 15,600 6,500 Retained earnings 33,210 107,310 36.400 75,400 Liabilities Non-Current Liabilities: Deferred consideration for Investment in Mortar Ltd. 12,381 Current Liabilities: 10,400…

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 Retained earnings $100 000 100 000 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 1. Prepare the acquisition analysis at 1 July 2019. 2. Prepare the consolidation worksheet entries for Michelle Ltd's group at 1 July 2019. 3. 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.