Question
Star & Anderson SAOG. acquired all of the common stock of Wilkinson SAOG. on January 1,...
Star & Anderson SAOG. acquired all of the common stock of Wilkinson SAOG. on January 1, 2018. As of that date, Wilkinson had the following trial balance:
|
Particulars |
Debit |
Credit |
|
Sundry Creditors |
30,000 |
|
|
Land & Buildings (10 year life) |
70,000 |
|
|
Additional Paid-in –Capital |
30,000 |
|
|
Sundry Debtors |
25,000 |
|
|
Cash and bank balances |
18,000 |
|
|
Short Term Investments |
17,000 |
|
|
Equity share capital |
150,000 |
|
|
Inventory |
55,000 |
|
|
Plant and Equipment (4 year life) |
120,000 |
|
|
Land |
45,000 |
|
|
Long term borrowings ( Maturity 31/12/2020 |
90,000 |
|
|
Retained earnings (Opening Balance) |
60,000 |
|
|
Supplies |
10,000 |
|
|
Total |
360,000 |
360,000 |
During 2018, Wilkinson SAOG reported net income of OMR 48,000 while paying dividends of OMR 6,000.
During 2019, Wilkinson SAOG reported net income of OMR 66,000
while paying dividends of OMR 18,000.
Assume that Star & Anderson SAOG. acquired the
common stock of Wilkinson SAOG. for OMR 294,000 in cash. As of
January 1, 2018, Wilkinson SAOG land had a fair value of OMR
51,000, its buildings were valued at OMR 94,000, and its equipment
was appraised at OMR 108,000. Any excess of consideration
transferred over fair value of assets and liabilities acquired is
due to an unamortized patent to be amortized over 5 years.
Star & Anderson SAOG decided to use the equity methodfor this investment.
Required: Prepare consolidation worksheet entriesfor December 31, 2018.
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