Reference no: EM132671564
Problem - On 1 July 2013 Tony Ltd acquired all of the share capital (cum div) of Claire Limited for a consideration of $600,000 cash and a brand with a fair value of $50,000. At the date of acquisition Claire's accounts showed a dividend payable of $8,000.
At acquisition date all the identifiable assets and liabilities were recorded at fair value with the exception of:
|
ASSET
|
Book Value
|
Market Value
|
|
Inventory
|
10,000
|
14,000
|
|
Land
|
80,000
|
85,000
|
|
Plant
|
16,000
|
|
|
(less depn)
|
(2000) 14,000
|
19,000
|
|
Accounts Receivable
|
20,000
|
18,000
|
The inventory was all sold by 30/6/14. The remaining useful life of the plant is 5 years. The accounts receivable were collected by 30/6/ 14 for $18,000.
The land was sold on 30/12/16 for $90000. The plant was on hand still at 30/6/17. At the date of acquisition the equity of Claire Ltd consisted of:
Share Capital 420,000
General Reserve 90,000
Retained Earnings 70,000
Information from the trial balances of Claire Ltd and Tony Ltd at 30 June 2017 is presented overleaf.
Additional Information -
1. On 1 Jan 2017 Tony Ltd sold inventory to Claire Ltd costing $60,000 for $75,000. Half of this inventory was sold to outside parties by 30/6/17.
2. On 1 Jan 2016 Tony Ltd sold inventory costing $9000 to Claire Ltd for $16,000. Claire Ltd treats the item as equipment and depreciates it at 10% per annum.
3. On 1 July 2016 Tony sold plant to Claire for $21,000. The plant had cost Tony $24,000 on 1 July 2014 and it was being depreciated at 10% per annum. Claire regards the plant as inventory. The inventory was all sold by 30th July 2016.
4. At 1 July 2016 Tony Ltd held inventory that it had purchased from Claire Ltd on 1 June 2016 at a profit of $9000. All inventory was sold by 30 June 2017.
5. Claire Ltd accrues dividends from Tony Ltd once they are declared.
6. Claire Ltd has earned $1200 in interest revenue in the 2017 financial year from Tony Ltd.
7. Claire Ltd has earned $3800 in service revenue in the 2017 financial year from Tony Ltd.
8. Assume a tax rate of 30%.
Required -
A. Prepare the acquisition analysis at 1 July 2013.
B. Prepare the BCVR and pre-acquisition journal entries at 1 July 2013.
C. Prepare the BCVR and pre-acquisition journal entries at 30 June 2017.
D. Prepare the consolidation worksheet journal entries to eliminate the effects of inter-entity transactions as at 30 June 2017.
|
Find the cost of the inventory on january
: Find the cost of the inventory on January 31 and the cost of raw materials issued to production for January under each of the Weighted average cost-flow
|
|
Why the company must evolve its compensation system
: Make a 350 written rationale that outlines the key factors of why the company must evolve its compensation system in order to meet current and future challenges
|
|
How will implement the strategy
: You are newly registered BAS agent, List three (3) strategies , describe how you will implement the strategy and what the benifits for you will be.
|
|
How much is the annual amortization expense on january
: How much is the annual amortization expense for 2019? On January 2, 2019, Adelphi Company purchased a patent for $155,000 plus $7,000 in legal fees.
|
|
Prepare the BCVR and pre-acquisition journal entries
: On 1 Jan 2016 Tony Ltd sold inventory costing $9000 to Claire Ltd for $16,000. Prepare the BCVR and pre-acquisition journal entries
|
|
Evaluate what amount of depletion that should be recorded
: Frederick Mining Company owns a large parcel of land, What is the amount of depletion that should be recorded? Round total the nearest whole dollar.
|
|
Find how much should be recorded on december for loss
: Find how much should be recorded on December 31 for the Gain or (Loss)? Round to whole dollars. Bowie Company uses a calendar year
|
|
Describe the major function of the nervous system
: Describe the major function of the nervous system. Be sure to include receptor, afferent neuron, integration center, efferent neuron, and effector.
|
|
Contrast the water cycle and carbon cycle
: Compare and contrast the Water Cycle and Carbon Cycle. At least 10 differences each.
|