On 1 July 2019, Brad Ltd acquired all of the 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 $1000. Legal costs associated with the acquisition of Pitt Ltd amounted to $1200. The asset and liabilities of Pitt Ltd at 1 July 2019 were as follows: Carrying amount Fair value Assets Cash $ 2000 $ 2000 Accounts receivable 10000 10000 68 000 232 000 Inventories 64 000 Equipment Accumulated depreciation – equipment Patents 320000 (96 000) 240 000 280000 Liabilities Accounts payable Debentures (16000) (64 000) (16000) (64 000) Required (a) Prepare the acquisition analysis at 1 July 2019 for the acquisition of Pitt Ltd by Brad Ltd.
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- 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 2019, BPL Ltd acquired all of the assets and liabilities of HTC Ltd. In exchange for these assets and liabilities, BPL Ltd issued 100 000 shares that at date of issue had a fair value of $4.95 per share. Costs of issuing these shares amounted to $1050. Legal costs associated with the acquisition of HTC Ltd amounted to $1520. The asset and liabilities of HTC Ltd at 1 July 2019 were as follows: Carrying amountFair value Assets: Cash$12 000$20 000 Accounts receivable10 50012 000 Inventory64 00071 000 Equipment 320 000239 000 Accumulated depreciation – equipment(96 000)— Patents240 000270 000 Liabilities: Accounts payable(16 000)(20 000) Debentures(64 000)(69 000) REQUIRED: a. Prepare the acquisition analysis at 1 July 2019 for the acquisition of HTC Ltd by BPL Ltd.Accounting at acquisition date by the acquirer On 1 July 2019, Brad Ltd acquired all of the 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 $1000. Legal costs associated with the acquisition of Pitt Ltd amounted to $1200. The asset and liabilities of Pitt Ltd at 1 July 2019 were as follows: Carrying amount Fair value Assets Cash $2000 $2000 Accounts receivable 10000 10000 Inventories…
- On 1 July 2019, Quick Buck Ltd took control of the assets and liabilities of Eldorado Ltd. Quick Buck Ltd issued 80,000 shares having a fair value of $2.40 per share in exchange for the net assets of Eldorado Ltd. 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: Carrying amount Fair value Machinery $40,000 S67,000 Fixtures & fittings 60,000 68,000 Vehicles 35,000 35,000 Current assets 10,000 12,000 Current liabilities (16,000) (18,000) Total net assets S129,000 Share capital (80,000 shares at $1.00 per share) $80,000 General reserve 20,000 Retained earnings 29,000 Total equity $129,000 Required: Prepare the journal entries in the records of Quick Buck Ltd at 1 July 2019 for the acquisition.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 2019, Michelle Ltd acquired all the issued shares of Tracy Ltd, paying $250 000 cash. At that date, the financial statements of Tracy Ltd showed the following information. Share capital Retained earnings $100 000 100 000 All the assets and liabilities of Tracy Ltd were recorded at amounts equal to their fair values at the acquisition date, except some inventories recorded at $10 000 below their fair value. Also, Michelle Ltd identified at acquisition date a patent with a fair value of $40 000 that Tracy Ltd has not recorded in its own accounts. Required 1. Prepare the acquisition analysis at 1 July 2019. 2. Prepare the consolidation worksheet entries for Michelle Ltd's group at 1 July 2019. 3. Discuss how the answers for 1 and 2, above, would change if the Michelle Ltd paid only $200 000 cash for the shares in Tracy Ltd.
- 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, Quick Buck Ltd took control of the assets and liabilities of Eldorado Ltd. Quick Buck Ltd issued 80,000 shares having a fair value of $2.40 per share in exchange for the net assets of Eldorado Ltd. 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: Carrying amount $40,000 Fair value Machinery Fixtures & fittings $67,000 68,000 60,000 Vehicles 35,000 10,000 (16.000) $129,000 Share capital (80,000 shares at $1.00 per share) $80,000 20,000 29,000 $129,000 35,000 12,000 (18,000) Current assets Current liabilities Total net assets General reserve Retained earnings Total equity Required: Prepare the journal entries in the records of Quick Buck Ltd at 1 July 2019 for the acquisition.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…
- Dog Ltd acquired all the issued share capital of Fish Ltd on 1 July 2019 for cash $2,250,000. At the date of acquisition, all assets of Fish Ltd were recorded at fair value, except for land, which had a carrying amount of $1,000,000 and its fair value was $1,155,000. The recorded balances of equity in Fish Ltd as at 1 July 2019 were: Share capital $1,360,000 Retained earnings $ 170,000 $1,530,000 Present the acquisition analysisOn 1 July 2019, Quick Buck Ltd took control of the assets and liabilities of Eldorado Ltd. Quick Buck Ltd issued 80,000 shares having a fair value of $2.40 per share in exchange for the net assets of Eldorado Ltd. 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: Carrying amount Fair value Machinery $ 40,000 $ 67,000 Fixtures & fittings 60,0000 68,000 Vehicles 35,000 35,000 Current assets 10,000 12,000 Current liabilities (16,000) (18,000) Total net assets $ 129,000 Share capital (80,000 shares at $1.00 per share) $ 80,000 General reserve 20,000 Retained earnings 29,000 Total equity 129,000 Required:Prepare the journal entries in the records of Quick Buck Ltd at 1 July 2019 for the acquisition.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.