Reference no: EM132216334
CASE STUDY - Financial Information for Lotus Limited and its 100% owned subsidiary, Troy Limited, for the period ended 31 December 2018 is shown in the table below:
|
Lotus Limited
|
Troy Limited
|
|
$
|
$
|
Sales Revenue
|
50000
|
47200
|
Dividend Revenue
|
2000
|
0
|
Gain On Sale of Property, Plant and Equipment
|
2000
|
4000
|
Other Income
|
2000
|
4000
|
Total Income
|
56000
|
55200
|
Cost of Sales
|
42000
|
36000
|
Other Expenses
|
6000
|
2000
|
Total Expenses
|
48000
|
38000
|
Profit Before Income Tax
|
8000
|
17200
|
Income Tax Expense
|
2700
|
3900
|
Profit for the Period
|
5300
|
13300
|
Retained earnings ( 1 January 2018)
|
12000
|
6000
|
|
17300
|
19300
|
Interim Dividend Paid
|
5000
|
2000
|
Retained earnings (31 December 2018)
|
12300
|
17300
|
ADDITIONAL INFORMATION:
(a) Lotus Limited acquired the shares in Troy Limited at 1 January 2018, buying the 10000 shares in Troy Limited for $40000. At that date, Troy Limited recorded share capital of $20000. The shares were bought on a cum div basis. Troy Limited had declared prior to the acquisition a dividend of $6000 that was paid in March 2018.
(b) At 1 January 2018, all identifiable assets and liabilities of Troy Limited were recorded at fair value, except for inventories, for which the carrying amount was $800 less than fair value. A number of inventories have been difficult to sell, and 10% of it is still in hand at 31 December 2018.
(c) Inventories on hand in Troy Limited at 31 December 2018 also include some items acquired from Lotus Limited during the period ended 31 December 2018. These were sold by Lotus Limited for $10000, at a profit before tax of $2000.
(d) Half of the goodwill was written off as the result of an impairment test on 31 December 2018.
(e) During March 2018, Lotus Limited provided management services to Troy Limited at a fee of $1000 paid by 31 December 2018.
(f) On 1 July 2018, Troy Limited sold machinery to Lotus Limited at a gain of $4000. This machinery had a carrying amount to Troy Limited of $40000. Lotus considered that this machinery had a 5 year life.
(g) By 31 December 2108, the financial assets acquired by Lotus Limited and Troy Limited from external entities increased $2000 and $1300 respectively, with gains and losses being recognised in other comprehensive income.
(h) The TAX RATE is 30%.
REQUIRED -
1. Prepare the acquisition analysis as at 1 January 2018.
2. Prepare the business combination valuation entries and pre-acquisition entries as at 1 January 2018.
3. Prepare the business combination valuation entries and pre-acquisition at 31 December 2018.
Examine three regulatory challenges you may face
: Examine three regulatory challenges you may face. Propose the technical or operational approaches that you would use to mitigate these factors.
|
Why do you think the authors chose the povs
: Why do you think the authors chose these POVs? (Consider: Why are these POVs effective/appropriate for these stories? How might the stories change.
|
Restaurant chain has serious personnel problems
: The McBurger Queen restaurant chain has serious personnel problems.
|
How we can use the craft tools to construct our fiction
: Craft elements refer to the building blocks of fiction/poetry. They include things like plot, character, point of view, imagery, rhyme, rhythm, meter, etc.
|
Prepare the business combination valuation entries
: Financial Information for Lotus Limited and its 100% owned subsidiary, Prepare the business combination valuation entries and pre-acquisition entries
|
What are your thoughts on strategic implementation
: What are your thoughts on strategic implementation? How does inventory impact the financial health of business?
|
Explain how each fundamental design principle is integral
: Explain how each fundamental design principle is integral to process improvement within the logistics and distribution industry.
|
Was the change or innovation embraced
: Was the change or innovation embraced or hindered by the leader(s) and by the followers within the organization?
|
What steps might have been taken to detect davids alleged
: In fact, he begins to express negative opinions about the organization in general. Eventually, David quits and begins his own consulting business.
|