Question

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 of $5 000, the dividend to be paid in March 2020. All other assets and liabilities except land were carried at amounts equal to their fair values. Applicable tax rate of 30%.

The Pre-acquisition entry for the year ended 30/06/2021:

Select one:

a. Dr Share capital $350,000, Dr Reserves $150,000, Dr Retained earnings $100,000, Dr BCVR $150,000, Dr Dividend payable $5,000, Cr Dividend receivable $5,000, Cr Shares in Kent $750,000

b. Dr Share capital $350,000, Dr Reserves $150,000, Dr Retained earnings $100,000, Dr Goodwill $150,000, Dr Dividend payable $5,000, Cr Shares in Kent $750,000, Cr Dividend receivable $5,000

c. Dr Shares in Kent $750,000, Dr Dividend receivable $5,000, Cr Share capital $350,000, Cr Reserves $150,000, Dr Retained earnings $100,000, Cr BCVR $145,000, Cr Dividend payable $5,000

d. Dr Share capital $350,000, Dr Reserves $150,000, Dr Retained earnings $100,000, Dr BCVR $150,000, Cr Shares in Kent $750,000

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The answer is option (d)

d) Dr Share Capital $350,000, Dr Reserves $150,000, Dr Retained Earnings $100,000, Dr BCVR $150,000, Cr Shares in Kent $750,000

AASB 102 allows all inventory recorded at lower cost. When the Fair value is higher than the cost, such an adjustment is not made in subsidiary books. AASB 138 do not allow internally generated goodwill in the subsidiary books. Hence the Option (b) is omitted.

There is no dividend received or yet to be received by the company. Therefore the Option (a) and Option (c) is omitted.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
6. On 1 January 2020, Big Ltd acquired all the issued shares (non cum. div.) of...
6. 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 of $5...
On 1 January 2017, Dark Ltd acquired all the issued shares (cum div.) of Sam Ltd...
On 1 January 2017, Dark Ltd acquired all the issued shares (cum div.) of Sam Ltd for $820 000. At that date, the equity of Sam Ltd was recorded at:                                     Share capital               $500 000                                     Reserves                      200 000                                     Retained earnings       50 000 On 1 January 2017, the records of Sam Ltd also showed;                            Carrying amount         Fair value Land                  $30000                        $ 55000 Further Sam Ltd had a dividend payable of $10 000, the dividend to be paid in...
20. Big Ltd acquired all the assets and liabilities of Small Ltd on 1 July 2019....
20. Big Ltd acquired all the assets and liabilities of Small Ltd on 1 July 2019. At this date, the assets and liabilities of Rod Ltd consisted of the following: Carrying Amount ($) Fair Value($) Assets Cash 250,000 600,000 Accounts receivable 450,000 500,000 Land 200,000 300,000 Vehicle 100,000 200,000 Accumulated depreciation -Vehicle (20,000) Liabilities Accounts payable 150,000 150,000 Loans 200,000 200,000 Equity Share Capital –@$6 per share 600,000    Reserves 30,000 In exchange for these assets and liabilities, Big Ltd...
In the year ended 30 June 2019, Jane Ltd acquired all of the issued shares of...
In the year ended 30 June 2019, Jane Ltd acquired all of the issued shares of Thomas Ltd for $231 300 on a-cum-div. basis. Information about the two companies at 1 July 2019 included the following. The equity of Thomas Ltd at 1 July 2019 consisted of $144 000 share capital and $36 000 retained earnings. Included in the assets and liabilities recorded by Thomas Ltd at 1 July 2019 were goodwill of $5400 and dividend payable of $4500. On...
Tom Limited purchased all the equity of Jerry Limited on 30 June 2018. At that time...
Tom Limited purchased all the equity of Jerry Limited on 30 June 2018. At that time the carrying value of the net assets of Jerry Limited was $581,000. This amount was made up in equity as follows: Share Capital $354,000; retained earnings $227,000. Jerry Limited has held some valuable land, purchased at $435,000, and inventory purchased at 72,000, but has not revalued land or inventory. The land fair value at 30 June 2018 was $549,000 and the inventory fair value...
On 1 July 2017, Max Ltd acquired 90% all the issued shares of Jay Ltd for...
On 1 July 2017, Max Ltd acquired 90% all the issued shares of Jay Ltd for $240 000. At this date the equity of Jay Ltd consisted of Share capital of $80 000, Retained earnings of $60 000, and General Reserve of $40 000. All the identifiable assets and liabilities of Jay Ltd were recorded at amounts equal to fair value. On 30/6/2019 the equity accounts consisted of Share capital of $80 000, Retained earnings of $70 000, and General...
On 1 July 2017, Max Ltd acquired 90% all the issued shares of Jay Ltd for...
On 1 July 2017, Max Ltd acquired 90% all the issued shares of Jay Ltd for $240 000. At this date the equity of Jay Ltd consisted of Share capital of $80 000, Retained earnings of $60 000, and General Reserve of $40 000. All the identifiable assets and liabilities of Jay Ltd were recorded at amounts equal to fair value. On 30/6/2019 the equity accounts consisted of Share capital of $80 000, Retained earnings of $70 000, and General...
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...
Individual Assignment ACC705 On 1 July 2015, Tuna Ltd acquired all the issued shares of Brim...
Individual Assignment ACC705 On 1 July 2015, Tuna Ltd acquired all the issued shares of Brim Ltd. Tuna Ltd paid $30 000 in cash and 20 000 shares in Tuna Ltd valued at $3 per share. At this date, the equity of Brim Ltd consisted of $66 000 share capital and $6000 retained earnings.    At 1 July 2015, all the identifiable assets and liabilities of Brim Ltd were recorded at amounts equal to their fair values except for: Carrying...
Selene Ltd is a major Australian manufacturer of women’s clothing. Selene Ltd acquired on 1 July...
Selene Ltd is a major Australian manufacturer of women’s clothing. Selene Ltd acquired on 1 July 2016 all the issued shares (cum-div.) of Marcus Ltd, a competitor, for $330 000. At this date, the equity of Marcus Ltd was as follows: SHARE CAPITAL $200,000 RETAINED EARNINGS $50,000 GENERAL RESERVE $20,000 All the identifiable assets and liabilities of Marcus Ltd were recorded at amounts equal to their fair values except for the following: Carrying Amount Fair Value Plant (cost $220,000) $180,000...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT