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Here are the issues we are most concerned about: Recently Brown Ltd have acquired all the shares of Pink Ltd. One of the assets in the statement of financial position of Pink Ltd was $42,000 goodwill, which had been recognised by Pink Ltd upon its acquisition of a business from Blue Ltd. Having prepared the acquisition analysis as part of the process of preparing the consolidated financial statements for Brown Ltd, the directors have asked you to explain these following issues:
Problem 1: What is the purpose of preparing consolidated statements as well as separate financial statements? Do we need to prepare separate financial statements if we are required to prepare consolidated statements?
Problem 2: How does the recording of goodwill by the subsidiary (Pink Ltd) affect the accounting for the group's goodwill? When goodwill is impaired in later years, should the impairment loss be recognised in the records of Brown Ltd or as a consolidation adjustment? How will it be recorded? What happens when it is fully impaired?
Problem 3: Where a fair increment involves a depreciable asset (increased by $50,000), why is depreciation expense adjusted in subsequent years? How is the depreciation rate/method
Cliff paid $4,200,000 of the invoices received during the year. What amount of Cliff's encumbrances were outstanding at June 30, 2011?
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Due to an error, no depreciation was taken on this machine in 2010. Doe discovered the error in 2011. Illustrate what amount should Doe record as depreciation expense for 2011? The tax rate is 40%.
question subsequent are a number of users of accounting information and examples of a question they need answered
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During October 175,000 units were completed and transferred out. At the end of the month, 30,000 units (direct materials 80 percent complete and conversion 40 % complete) remain in WIP inventory. Compute EU, cost per EU, cost of units transferred o..
How do calculate the fair value less cost to sell? Denga Ltd has a machine that originally cost R1 000 000 and is depreciated on a straight-line
Identify the information that is relevant to management's decision and justify your answer. Also identify the information is irrelevant to management
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