Find the amount of goodwill or gain on bargain purchase

Assignment Help Financial Accounting

Reference no: EM132661391

On 1 July 2017, Sun Ltd acquired all the issued capital of Moon Ltd for a cash payment of $710 000 when the equity of Moon Ltd was:

Share capital $580 000

Retained earnings $ 50 000

At 1 July 2017, all assets of Moon Ltd were fairly valued, with the exception of an item of plant, with a carrying amount of $330 000, but a fair value of $390 000. The plant was initially acquired by Moon Ltd on 1 July 2013 for $550 000 when it had an estimated useful life of 10 years, with no residual value.
Tax rate is 30%. Sun Ltd also has small shareholdings in other companies.

Problem (a) Prepare a acquisition analysis and determine the amount of goodwill or gain on bargain purchase at acquisition.

Problem (b) Prepare the acquisition elimination journal entries for consolidation as at 30 June 2020.

Problem (c) Goodwill has been impaired by $10 000 for the year ending 30 June 2020. Previous impairments to goodwill recorded in prior years total $8 000. Prepare the consolidation elimination journal entries for the year ending 30 June 2020.

Problem (d) Moon Ltd is charged management fees every month by Sun Ltd.

During the year ending 30 June 2020, Moon Ltd paid a total of $20 800 in management fees to Sun Ltd.

Moon Ltd's management fee payable balance was $6 100 at 30 June 2019, but this had dropped to $4 200 on 30 June 2020.

Prepare the consolidation elimination journal entries for the year ending 30 June 2020.

Reference no: EM132661391

Questions Cloud

Discuss the ethical of using network tools such as privacy : Discuss the ethical of using network tools such as privacy. Provide examples from your outside research to support your comments. Use at least two outside.

How much does capital fall : Suppose a bank has a leverage ratio of 20. If the value of its assets falls by 2.5%, by how much does its capital fall?

Discuss about connection to your desired work environment : Demonstrate a connection to the current work environment. If not employed, demonstrate a connection to your desired work environment.

Calculate the number of units completed in march : Calculate the following numbers: Number of units completed in March ; Cost per equivalent unit for conversion costs; Conversion costs included in units

Find the amount of goodwill or gain on bargain purchase : On 1 July 2017, Prepare a acquisition analysis and determine the amount of goodwill or gain on bargain purchase at acquisition.

What is the quantity where batty balls profits are maximized : 2. Based on the table above, what is the quantity where Batty Balls Profits are maximized?

Compute the materials price and quantity variances for month : Huron Company produces a commercial, Compute the materials price and quantity variances for the month, show the total material spending variance.

Derive the equation for the ae curve : For an economy in which government expenditure is 260 billion, exports are 90 billion imports are 30% of real gdp

Real interest rate from one-year investment : what is the real interest rate from your one-year investment? Explain with words what a real interest rate is.

User Account

All Pages