Question

onsider the following: On 1st July 20X6 P Ltd acquired all the share capital of S...

onsider the following:

On 1st July 20X6 P Ltd acquired all the share capital of S Ltd

At that date the equity of S Ltd was:

Share Capital ????$150,000

Retained earnings ???$12,000

Additional information:

During the current year P Ltd received a dividend of $15,000 declared by S Ltd at 30 June 20X7.

Consolidation worksheet 30 June 20X8

P Ltd

S Ltd

Elimination

Consolidated Statement

Dr

Cr

Gross profit

300,000

150,000

Dividend received from S Ltd

22,000

322,000

150,000

Expenses

102,000

50,000

Profit before tax

220,000

100,000

Less: Income tax expenses

60,000

30,000

Profit

160,000

70,000

Retained earnings 01-07-20X7

25,000

20,000

Available for appropriation

185,000

90,000

Appropriation

Interim dividend paid

20,000

7,000

Declared dividend

20,000

13,000

Total appropriation

40,000

20,000

Retained earnings 30-06-20X8

145,000

70,000

Share capital

300,000

150,000

Dividend payable

20,000

13,000

Other liabilities

140,000

67,000

605,000

300,000

Share in S Ltd

170,000

-

Other assets

435,000

300,000

Goodwill in acquisition

-

-

605,000

605,000

Requirement:

Complete the worksheet.

Homework Answers

Answer #1

Consolidation worksheet 30 June 20X8

P Ltd

S Ltd

Elimination

Consolidated Statement

Dr

Cr

Gross profit

       300,000

        150,000

              450,000

Dividend received from S Ltd

          22,000

     22,000

                          -  

       322,000

        150,000

     22,000

               -  

              450,000

Expenses

       102,000

           50,000

              152,000

Profit before tax

       220,000

        100,000

              298,000

Less: Income tax expenses

          60,000

           30,000

                90,000

Profit

       160,000

           70,000

              208,000

Retained earnings 01-07-20X7

          25,000

           20,000

     12,000

     15,000

                48,000

Available for appropriation

       185,000

           90,000

              256,000

Appropriation

Interim dividend paid

          20,000

             7,000

        7,000

                20,000

Declared dividend

          20,000

           13,000

     13,000

                20,000

Total appropriation

          40,000

           20,000

                40,000

Retained earnings 30-06-20X8

       145,000

           70,000

              216,000

Share capital

       300,000

        150,000

   150,000

              300,000

Dividend payable

          20,000

           13,000

     13,000

                20,000

Other liabilities

       140,000

           67,000

              207,000

       605,000

        300,000

              743,000

Share in S Ltd

       170,000

-

   170,000

                          -  

Other assets

       435,000

        300,000

              735,000

Goodwill in acquisition

-

-

        8,000

                   8,000

       605,000

        300,000

  

              743,000

Notes:

1. Dividends paid or payable by the subsidiary are all elimiated

a. Dividends received by P Ltd is reduced from its Net income or profit

b. Dividends paid by S ltd which pertain to previous year $15,000 is added back to the retained earnings and so is the interim dividends paid $7,000

c. Dividends declared and dividend payable $13,000 each are eliminated

2. Investment in Subsidiary ($170,000) is elimiated and so is the Equity ($150,000) and RE ($12,000) on the date of acquistion

3. Goodwill is added:

Amount Paid        170,000
Equity        150,000
RE           12,000
Goodwill             8,000
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Tim Ltd acquired all the issued capital of Tam Ltd on 1 July 2012 for $3,020,000....
Tim Ltd acquired all the issued capital of Tam Ltd on 1 July 2012 for $3,020,000. At that date the shareholders’ equity of Tam Ltd was: $ Share Capital 2,200,000 Retained Earnings 640,000 Additional information for the year ended 30 June 2014: (1) Intercompany sales: (a)    Tim Ltd to Tam Ltd              $42,000 (b)    Tam Ltd to Tim Ltd              $36,000 (2) Unrealised profits in closing inventory as at 30 June 2014 is $2,400 for goods sold by Tam Ltd to Tim...
Question 1: (25 marks) On 1 July 2015, I Ltd. acquired a 30% interest in one...
Question 1: On 1 July 2015, I Ltd. acquired a 30% interest in one of its suppliers, G Ltd., at a cost of 13,650. The directors of I Ltd. believe they exert 'significant influence' over G Ltd. The equity of G Ltd. at acquisition was: Share capital (20000 shares) $20,000 Retained earnings $10,000 All the identifiable assets and liabilities of G Ltd. at 1 July 2015 were recorded at fair value except for some depreciable non-current assets with a fair...
Hahndorf Ltd acquired 100% of the shares of Sarina Ltd on 1 July 2015 for $700,000,...
Hahndorf Ltd acquired 100% of the shares of Sarina Ltd on 1 July 2015 for $700,000, when the equity of Sarina Ltd consisted of: Share Capital                                  $500,000 General Reserve                                 80,000 Retained Earnings                             30,000 All identifiable assets and liabilities of Sarina Ltd were fairly valued at acquisition except the machinery, which had a fair value of $140,000. The machinery had a further 7-year life with depreciation based on the straight-line method. Selected financial information for both companies at 30 June 2018...
Hahndorf Ltd acquired 100% of the shares of Sarina Ltd on 1 July 2015 for $700,000,...
Hahndorf Ltd acquired 100% of the shares of Sarina Ltd on 1 July 2015 for $700,000, when the equity of Sarina Ltd consisted of: Share Capital                                  $500,000 General Reserve                                 80,000 Retained Earnings                             30,000 All identifiable assets and liabilities of Sarina Ltd were fairly valued at acquisition except the machinery, which had a fair value of $140,000. The machinery had a further 7-year life with depreciation based on the straight-line method. Selected financial information for both companies at 30 June 2018...
Hahndorf Ltd acquired 100% of the shares of Sarina Ltd on 1 July 2015 for $700,000,...
Hahndorf Ltd acquired 100% of the shares of Sarina Ltd on 1 July 2015 for $700,000, when the equity of Sarina Ltd consisted of: Share Capital                              $500,000 General Reserve                             80,000 Retained Earnings                          30,000 All identifiable assets and liabilities of Sarina Ltd were fairly valued at acquisition except the machinery, which had a fair value of $140,000. The machinery had a further 7-year life with depreciation based on the straight-line method. Selected financial information for both companies at 30 June 2018...
Corporate Accounting 16. On 1 January 2020, Big Ltd acquired all the issued shares (non cum....
Corporate Accounting 16. On 1 January 2020, Big Ltd acquired all the issued shares (non cum. div.) of small Ltd for $750 000. At that date, the equity of small Ltd was recorded at:                                                 Share capital                       $350,000                                                 Reserves                               150,000                                                 Retained earnings              100 000 On 1 January 2020, the records of small Ltd also showed that the carrying value of the land is $40,000 with a fair value of $50,000 . Further small Ltd had a dividend payable...
Computer Patch Ltd acquired 100% shares in Microchips Ltd on the 1 July 2019 for a...
Computer Patch Ltd acquired 100% shares in Microchips Ltd on the 1 July 2019 for a cost of $ 2 million. The following financial statements of Computer Patch Ltd and Microchips Ltd have been extracted at the time of acquisition: Computer Patch Ltd Microchips Ltd Reconciliation of opening and closing retained earnings ($000) ($000) Sales revenue 671.4 540 less Cost of goods sold (464) (238) Gross Profit 207.4 302 Dividends received from Microchips Ltd 93 - Management fee revenue from...
Vixen Ltd owns all the share capital of Post Ltd and the income tax rate is...
Vixen Ltd owns all the share capital of Post Ltd and the income tax rate is 30%. _ In February 2020, Post Ltd sold inventories to Vixen Ltd for $12 000, at a mark-up of 50% on cost. One-third of this inventory were unsold by Vixen Ltd at 30 June 2020, the rest were sold to external entities. _ In December 2019, Vixen Ltd paid a $1500 interim dividend. Required In relation to the above intragroup transactions prepare the appropriate...
On 1 July 2019 Prometheus Ltd acquired 90% of the shares of Unbound Ltd for $326...
On 1 July 2019 Prometheus Ltd acquired 90% of the shares of Unbound Ltd for $326 430. At this date the equity of Unbound Ltd consisted of share capital of $225 000 and retained earnings of $90 000. All the identifiable asset and liabilities of Unbound Ltd were recorded at amounts equal to fair value except for: Carrying amount Fair                                                                                                                                                    value Land $  60 000 $  67 500 Plant (cost $285 000) 225 000 247 500 Inventory     11 250 13 500...
Question 1: (25 marks) On 1 July 2015, I Ltd. acquired a 30% interest in one...
Question 1: On 1 July 2015, I Ltd. acquired a 30% interest in one of its suppliers, G Ltd., at a cost of 13,650. The directors of I Ltd. believe they exert 'significant influence' over G Ltd. The equity of G Ltd. at acquisition was: Share capital (20000 shares) $20,000 Retained earnings $10,000 All the identifiable assets and liabilities of G Ltd. at 1 July 2015 were recorded at fair value except for some depreciable non-current assets with a fair...