Reference no: EM132613835
On 1 July 2016, Gold Ltd acquired all the issued capital of Silver Ltd for a cash payment of $550 000 when the equity of Silver Ltd was:
Share capital $480 000
Retained earnings $ 50 000
At 1 July 2016, all assets of Silver 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 Silver Ltd on 1 July 2012 for $550 000 when it had an estimated useful life of 10 years, with no residual value.
Tax rate is 30%. Gold Ltd also has small shareholdings in other companies.
Question 1: What is the primary criterion for determining whether or not to consolidate an entity?
Question 2: What are the three necessary elements to determine if this primary criterion exists?
Question 3: Assuming a company is required to prepare consolidated financial statements, where are the consolidation journals processed?