Business Combination and Consolidation

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Reference no: EM133064741

Question - Business Combination and Consolidation

On the 1 July 20X6 Howard Ltd gained control of Carter Ltd by buying 70% of its shares for $70,000. At this date, Carter had share capital $50,000 and retained profits $30,000.

Additional information:
- Goodwill impairment is $500 in year ended 20X8 and $850 in 20X9.

- Dividends are paid out of current period profit. The dividends were paid before year-end.

- Inventory purchases by Howard from Carter during the current year amounted to $30,000. Their cost to Carter was $20,000. Howard still holds $18,000 of this inventory at year-end.

- Loan from Carter attracts 12% interest per annum. The interest was paid before year-end.

- Included in other assets of Howard is equipment purchased from Carter on the 1 July 20X7 for $41,000. The equipment was four years old when sold, had cost Carter $50,000 to buy, with expected residual value $5,000, and had been depreciated 10% p.a. straight-line. Howard depreciates the equipment (after deducting the same residual) straight-line over the remaining six-year life.

Required

Complete the worksheet as at 30 June 20X9.

Attachment:- Business combination.rar

Reference no: EM133064741

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