Prepare all consolidation adjusting entries and the consolidated financial statements for FBE Group as at 31 December 2021, the current year end. Ignore tax effects on adjustments.
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- On 1 July 2019, SydMel Ltd acquired 80% of the issued shares of Sydney Ltd for $165 000. At this date, the equity of Lee Ltd was: Share capital $100 000 General reserve 40 000 Retained earnings 50 000 At acquisition date all the identifiable assets and liabilities of Sydney Ltd were recorded at amounts equal to fair value. At 30 June 2021, the equity of Sydney Ltd consisted of: Share capital $100 000 General reserve 50 000 Retained earnings 80 000 During the 2020–21-year Sydney Ltd recorded a profit of $15 000. Required: Prepare the consolidated worksheet entries at 30 June 2021 for SydMel Ltd assuming: At 1 July 2019, the fair value of the non-controlling interest was $39 000 and SydMel Ltd adopts the full goodwill method. SydMel Ltd adopts the partial goodwill method.On 1 July 2019, Christina Ltd acquired all the issued shares of Adeline Ltd, paying $120 000 cash and transferring 100 000 of its own shares to Adeline Ltd’s former shareholders. At that date, the financial statements of Adeline Ltd showed the following information. Share Capital $100000 General Reserve 50000 Retained Earnings 150000 All the assets and liabilities of Adeline Ltd were recorded at amounts equal to their fair values at the acquisition date. The fair value of Christina Ltd’s shares at acquisition date was $2 per share. Christina Ltd incurred $30 000 in acquisition‐related costs that included $5000 as share issue costs. Required Prepare the acquisition analysis at 1 July 2019. Prepare the journal entries for Christina Ltd to recognise the investment in Adeline Ltd at 1 July 2019. Prepare the consolidation worksheet entries for…On 1 July 2019, Brad Ltd acquired all assets and liabilities of Pitt Ltd. In exchange for these assets and liabilities, Brad Ltd issued 100,000 shares that at date of issue had a fair value of $5.20 per share. Costs of issuing these shares amounted to $1,000. Legal cost associated with the acquisition of Pitt Ltd amounted to $1,200.The assets and liabilities of Pitt Ltd at 1 July 2019 were as follows:Carrying Amount ($) Fair Value ($)AssetsCash 2,000 2,000Accounts receivable 10,000 10,000Inventory 64,000 68,000Equipment 320,000 232,000Accumulated depn - Equipment (96,000) -Patents 280,000 280,000LiabilitiesAccounts payable (16,000) (16,000)Debentures (64,000) (64,000)Required:a) Prepare the acquisition analysis at 1 July 2019 for the acquisition of Pitt Ltd by Brad Ltd.b) Prepare the journal entries in the records of Brad Ltd at 1 July 2019.
- On 1 July 2021, King Ltd acquired all the share capital of Queen Ltd for $1,800,000, and on that date Queen Ltd.'s equity were as follows: Share capital $1,200,000; Revaluation surplus $500,000 and Retained earnings $200,000. All the assets and liabilities of Queen Ltd. were recorded at fair value on 1 July 2021. During the financial year 2022, the following intragroup transactions occurred between King Ltd and Queen Ltd: Queen Ltd sold land to King Ltd for $400,000, which was $100,000 above cost. The land was still hold by King Ltd. King Ltd sold an equipment to Queen Ltd for $400,000. The carrying amount of equipment to King Ltd of $320,000. Both entities depreciate equipment at a rate of 10% p.a. on cost. Queen Ltd sold inventories costing $160,000 to King Ltd for $180,000. 1/4th of the inventories were still on hand with King Ltd. King Ltd received $15,000 of service revenue from Queen Ltd. Queen Ltd paid dividend of $30,000 and interest on loan of $8,000 to King Ltd. The tax rate…On 1 July 2021, James Ltd acquired all the issued shares of Dean Ltd for $350,000. At this date, the financial statements of Dean Ltd showed the following: $ Share capital 270,000 Retained earnings 26,500 General Reserve 8,800 Total equity 305,300 Goodwill 25,000 At acquisition date, all the net identifiable assets and liabilities in Dean Ltd were recorded at amounts equal to their fair value except for: Asset Carrying amount ($) Fair Value ($) Inventories 15,000 18,000 Plant (cost $400,000) 210,000 220,000 The Plant was calculated to have a further life of 5 years, and was depreciated on a straight-line basis. All inventory was sold by 30 June 2020. Assume 30% tax rate Required: Prepare the acquisition analysis at 1 July 2021. Prepare the consolidation entries at acquisition date, 1 July 2021. Include narrations for each entry. Prepare the consolidation worksheet as at 1 July 2021. Prepare a Balance sheet for the reporting Group, James Ltd as at 1 July 2021 in narrative format.On 1 July 2020, Sky Ltd acquired 70% of the share capital (ex. div.) of Jim Ltd for $500,000. At that date, the relevant balances in the records of Jim Ltd were: Share capital General reserve Retained earnings Dividend payable S 434,000 35,000 126,000 14,000 At the date of acquisition all assets and liabilities of Jim Ltd were recorded in the accounting records at amounts equal to their fair values with the exception of the following assets: Carrying amount Fair value Land Machine 56,000 30,800 Land was sold on 1 May 2023 for $77,000. $ 67,200 49,000 The cost of the Machine was $58,800 and had a further 5-year life as at the date of acquisition. Jim Ltd had reported a Contingent liability at 1 July 2020 in relation to claims by customers for damaged goods. Sky Ltd placed a fair value of $12,600 on these claims at acquisition date. This claim was settled on 1 April 2023 for $7,000. Additional information: a) On 1 March 2023, Jim Ltd purchased inventory from Sky Ltd for $25,200,…
- On 1 July 2019, Quick Buck Ltd took control of the assets and liabilities of Eldorado Ltd. Quick Buck Ltdissued 80,000 shares having a fair value of $2.40 per share in exchange for the net assets of EldoradoLtd. The costs of issuing the shares by Quick Buck Ltd cost $1,600.At this date the statement of financial position of Eldorado Ltd was as follows: c Carrying amount Fair valueMachinery $40,000 $67,000Fixtures & fittings 60,000 68,000Vehicles 35,000 35,000 Current assets 10,000 12,000Current liabilities (16,000) (18,000)Total net assets…On 1 January 2018, Chelsea Ltd acquired 75% of the shares in Orlando Ltd at N$126 000. At that date, the balance on Orlando Ltd’s retained earnings account amounted to N$36 000. The share capital amounted to N$120 000 and no shares have been issued since that date.The following are the condensed financial statements of Chelsea Ltd and subsidiary OrlandoLtd at 31 December 2020.STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2020Chelsea LtdN$Orlando LtdN$ASSETSProperty, plant and equipment 168 000 105 000Investment in Orlando Ltd at fair value 180 000 -Trade receivables 87 000 156 000Total assets 435 000 261 000EQUITY AND LIABILITIESShare capital 240 000 120 000Mark-to-market reserve 54 000 -Retained earnings 54 000 54 000Long-term borrowings 30 000 6 000Trade and other payables 57 000 81 000Total equity and liabilities 435 000 261 000EXTRACT FROM THE STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2020Chelsea LTDN$Orlando LTDN$Profit 55 500…Madari Ltd purchased 100% of the shares of Concerto Ltd on 1 July 2020 for $70,000. On the date of acquisition, the equity of the two entities was as follows: Madari Ltd($) Concerto Ltd ($) General Reserve 25,000 5,500 Retained Earnings 4,500 3,300 Share Capital 60,000 38,000 At 1 July 2020, all of the identifiable assets and liabilities of Concerto Ltd were recorded at fair value except for the following: Carrying Amount ($) Fair Value ($) Inventory 3,000 4,500 Plant and Equipment 60,000 65,000 The plant and equipment had a further 5-year useful life. Any valuation adjustments are made on…
- On 1 July 2018 Cool Ltd purchased an 80% controlling interest in Sunny Ltd for a consideration of $350,000. On that date the pre-control equity of Sunny consisted of: Paid up capital $200 000 Retained profits $150 000 General reserve $ 50 000 Total equity $400 000 The net assets of Sunny Ltd were recorded at fair values. Relevant financial data for the two companies, for the year ending 30 June 2020, is provided on the worksheet below. Further information: During May 2019 Sunny Ltd sold inventory to Cool Ltd at a profit of $8,000. This inventory was sold by Cool Ltd to external parties during the month of July 2019. On 30 June 2020 Cool Ltd purchased from Sunny Ltd an item of equipment for $40,000. The equipment has a cost of $90,000 and a carrying amount of $28,000. The equipment has a remaining useful life of 4 years and a residual value of zero. Consolidation worksheet as at 30 June 2020 Cool Sunny Sum Eliminations…Madari Ltd purchased 100% of the shares of Concerto Ltd on 1 July 2020 for $70,000. On the date of acquisition, the equity of the two entities was as follows: Madari Ltd($) Concerto Ltd ($) General Reserve 25,000 5,500 Retained Earnings 4,500 3,300 Share Capital 60,000 38,000 At 1 July 2020, all of the identifiable assets and liabilities of Concerto Ltd were recorded at fair value except for the following: Carrying Amount ($) Fair Value ($) Inventory 3,000 4,500 Plant and Equipment 60,000 65,000 The plant and equipment had a further 5-year useful life. Any valuation adjustments are made on…On 1 July 2021, Mel Ltd took control of the assets and liabilities of Syd Ltd. At this date the statement of financial position of Syd Ltd was as follows: Required Prepare the journal entries in the records of Mel Ltd at 1 July 2021 in each of the following situations, assuming the costs of issuing the shares by Mel Ltd cost $1600. Mel Ltd issued 80 000 shares having a fair value of $2.40 per share in exchange for the net assets of Syd Ltd Mel Ltd issued 80 000 shares having a fair value of $2.00 per share in exchange for the net assets of Syd Ltd. Mel Ltd acquired the shares of Syd Ltd. The agreement was that Mel Ltd would pay the shareholders of Syd Ltd one share in Mel Ltd for every two shares held in Syd Ltd plus $1 in cash for each share held in Syd Ltd. Shares in Mel Ltd have a fair value of $1.80 per share.