hii.. i need to get the practical question done asap. it is provided in the requ
ID: 2550981 • Letter: H
Question
hii.. i need to get the practical question done asap. it is provided in the required field what you need to do. thanks
Topic 1: Consolidation: Principles and accounting requirements
On 1 July 2017, Patience Ltd acquired all the issued shares of Silence Ltd for a cash consideration of $1,000,000. At that date, the financial statements of Silence Ltd showed the following information.
share capital $650000
general reserve $ 20,000
retained earnings $ 250 000
All the assets and liabilities of Silence Ltd were recorded at amounts equal to their fair values at the acquisition date, except some equipment recorded at $50,000 below its fair value with a related accumulated depreciation of $80,000. Silence Ltd accounted for all its property, plant and equipment in its own books using the cost model. In addition, Patience Ltd identified at acquisition date a contingent liability related to a lawsuit where Silence Ltd was sued by a former supplier and attached a fair value of $40,000 to that liability.
Required:
1. Prepare the acquisition analysis at 1 July 2017.
2. Prepare the consolidation worksheet entries for Patience Ltd’s group at 1 July 2017.
Question 1
Max. marks allocated
Acquisition analysis (Part 1)
5
Consolidation worksheet entries (Part 2)
14
Presentation
1
Total
20
the above is the question which needs to be solved. thanks
Question 1
Max. marks allocated
Acquisition analysis (Part 1)
5
Consolidation worksheet entries (Part 2)
14
Presentation
1
Total
20
Explanation / Answer
$ $ share capital 650000 general reserve 20000 retained earnings 250000 920000 (A) difference between book value and fair value of assets 50000 less : fair value of liabilities -40000 net difference in fair value of assets 10000 (B) Purchase price 1000000 Less : (A+B) 930000 Goodwill 70000 consolidation worksheet entries Silence Ltd. Patience Ltd Dr(elimination entries) Cr(elimination entries) Adjusted Totals share capital 650000 650000 general reserve 20000 20000 retained earnings 250000 250000 Goodwill 70000 70000 Balance sheet adjusted to fair value (B) 10000 10000 Investment in Silence Ltd 1000000 1000000
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