Question

On January 1st 2020 The Skywalker and Vadar Companies had the following balance sheets: SkyWalker Vadar...

On January 1st 2020 The Skywalker and Vadar Companies had the following balance sheets:

SkyWalker Vadar
cash 2,000,000 50,000
accounts receivable 1,000,000 80,000
inventory 1,000,000 50,000
equipment 1,000,000 100,000
accumulated depreciation 500,000 50,000
land 1,000,000 100,000
total assets 5,500,000 330,000
accounta payable 1,000,000 40,000
common stock $1 par 2,000,000 100,000
apic common stock 1,000,000 100,000
retained earnings 1,500,000 90,000

On January 2nd Skywalker acquired of 90% the outstanding stock of Vadar Company for 500,000 shares of common stock. On January 2nd Skywalker stock was selling for $2 per share.

On January 1st the fair market value of Vadar's land was $125,000; the fair market value of their inventory was $130,000; the fair market value of the equipment was $30,000; other assets and liabilities had a fair market value equal to book value

REQUIRED:

A. MAKE THE JOURNAL ENTRY SKYWALKER MAKES WHEN IT ACQUIRES THE VADAR STOCK

B. MAKE THE JOURNAL ENTRY VADAR MAKES WHEN ITS STOCK IS ACQUIRED BY SKYWALKER

C. PREPARE A CONSOLIDATED BALANCE SHEET ON JANUARY 2ND

D. MAKE THE NECESSARY WORKSHEET ENTRIES NEEDED TO PREPARE THE CONSOLDIATED BALANCE SHEET.

WHAT WOULD BE THE REPORTED GOODWILL IF POTTER AND VOLDOMORT WERE BRITISH COMPANIES? ( UNDER IFRS)

Business   Accounting   
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Answer #1

A.

Journal entry in the books of Skywalker
Particulars Debit($) Credit($)
Investment in shares of Vadar Company 500000
Shares of common stock A/c 500000
(To record acquisition of stock of vadar company)

B.

Journal entry in the books of Vadar company
Particulars Debit($) Credit($)
Retained earnings 90000
Common stock 200000
Accounts payable 40000
Accumulated depreciation 50000
Accounts receivable 80000
inventory 50000
equipment 100000
Land 100000
Cash 50000
(To record the reversal of assets and liabilities when taken over by Skywalker) 380000 380000
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