22320 - Spring 2022 Week 5: Tutorial Questions Question 1 On 1 July 2016 Savannah Ltd acquires all the shares in Judo Ltd for $700,000 cash. At the date of acquisition, the subsidiary has dividend payable of $52,879. The shares were acquired ex div. The financial statements of Judo Ltd as at 1 July 2016 shows the following: Retained earnings200,000 Share capital300,000 The tax rate is 30%. At the date of acquisition all the net assets of Judo Ltd are at fair value except for the following: Carrying amountFair value Land$100,000150,000 Equipment (cost 400,000)$100,000300,000 Land = 150,000-100,000 Equipment = 300,000-100,000 Land is sold on 30 June 2018. Selling price is unknown (note:this does not stop you from figuring out the consolidation entries). Remaining useful life of equipment is 5 years. Required: 1.Prepare an acquisition analysis. Purchase price Less: FVINA Share capital Retained earnings Goodwill *FVA = (150,000-100,000) x 70% + (300,000-100,000) x 70% = 175,000
2.Record all the consolidation adjusting entries required on 1 July 2016. Consolidation adjusting entries on 1/7/2016 DOA: Elimination entry Dr Share capital Dr retained earnings Dr FVA Dr Goodwill Cr Investment in subsidiary FVA of land at DOA Dr Land Cr FVA Cr DTL FVA of equipment at DOA Dr Accumulated depreciation Cr Equipment Dr Equipment Cr FVA Cr DTL 3.Record all the consolidation adjusting entries required on 30 June 2017. Consolidation adjusting entries on 30/6/2017 *DR DTL RELATES TO ACCOUMLATED DEPRECIATION*
4.Record all the consolidation adjusting entries required on 30 June 2018.
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