ACC204 Corporate Accounting and Reporting Assignment

Reference no: EM132636121

ACC204 Corporate Accounting and Reporting Assignment - King's Own Institute, Australia

Question - Sam Ltd purchased 92% of the issued shares (Ex div) of Rex Ltd for $1804000 on 1 July 2019 when the equity of Rex Ltd was as follows;

Share capital - 721600

General reserve - 541200

Asset revaluation - 270600

At this date, Rex Ltd had not recorded any goodwill, and all identifiable assets and liabilities were recorded at fair value except for the followings;

Account	Cost	Carrying Amount	Fair value	Further life (years)
Inventories		$54,100	$59,500
Land		$135,000	$149,000
Vehicle	$210,000	$168,000	$202,000	10
Contingent Liability	Rex Ltd identified at acquisition date a lawsuit where Rex Ltd was sued by a former supplier with the Fair value of:		$22,000
Unrecorded Asset	Rex Ltd had unrecorded and internally generated Patent with the Fair Value of:		$54,000
Unrecorded Asset	Rex Ltd had unrecorded and internally generated in-process research and development with the Fair Value of:		$41,000

70% of inventory were sold by 30 June 2020. Further life of the assets are listed on the above table. Partial goodwill method is under use and Tax rate: 30%.

Applying accounting standards issues relevant to the consolidation process, Required;

1- Prepare the acquisition analysis at acquisition date.

2- Prepare the business combination valuation entries and pre-acquisition entry at acquisition date.

3- Prepare the journal entry to recognise NCI at acquisition date.

4- Prepare the consolidation worksheet entries at 30 June 2020. Assume a profit for Rex Ltd for the year ended 30 June 2020 of $3203800.

5- Analyse how step 1 to 4 will change if the full goodwill method is used.

6- Compare in detail the current situation with the case that Sam Ltd acquires only 20% of issued shares of Rex Ltd with a significant influence on Rex Ltd.

Attachment:- Corporate Accounting and Reporting Assignment File.rar

Reference no: EM132636121

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