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- Financial Accounting II / © ICCG / Page 46 Question 1 The following figures were extracted from head office books of the HPD Co., and submitted by the branches as at 31 December 2006. Head Office Durban Branch Prieska Branch Cash at bank (Dr) Branch account Durban (Dr) Branch account Prieska (Dr) Creditors Debtors Furniture and fittings at cost Head office account (Cr) Land and buildings at cost Vehicles at cost 10 000 3 000 2 000 4 800 4 800 4 600 2 000 1 000 7 000 6 000 4 000 1 500 1 500 2 000 4 600 4 900 12 000 4 000 1 000 Depreciation provision Furniture and fittings 1 000 400 300 Vehicles 2 000 400 Owner's capital 50 000 Stock at 31 December Administration expenses Gross profit 4 000 3 000 5 800 10 000 2 000 3 000 7 600 30 000 31 000 Durban Branch sent goods valued at R200 to Prieska Branch. The entries were made in the branch books, but not in the head office books. Prieska sent Head Office R100, which was only received on 3 January 2002. Required Pass all journal entries…Question 2 Nick Ltd acquired 100% of the issued capital of Wing Ltd on 1 July 2011 for $270000. The statements of financial position of the companies immediately after the acquisition are provided below. All assets have been reported following fair value. Statement of Financial Position For the year ended 1 July 2011 Nick Ltd Wing Ltd $ S Shareholders' equity Share capital 450,000 180,000 General reserve 45,000 25,000 Retained earnings 140,000 20,000 Total shareholders' equity 635,000 225,000 Assets Current assets Cash at Bank 50,000 30,000 Accounts Receivable 20,000 10,000 Inventory 100,000 25.000 170,000 65,000 Non-current assets Investment in Wing Ltd 270,000 Land 250,000 200,000 Plant & Equipment 100,000 80.000 620,000 280,000 Total assets 790,000 345,000 Liabilities Current liabilities Accounts Payable 40,000 10,000 Interest Payable 55,000 18,000 Non-current liabilities Bank loan 100,000 102,000 Total liabilities 155,000 120,000 Net assets 635,000 225,000 Required 1. Calculate…Question 1 The Omaheke Manufacturers Ltd acquired Salomon Factory Lld on 1 January 2015 for N$ 1.8 million of Salomon Factory Lld ordinary 50 cents shares paying N$1.2m. At the date of acquisition the retained earnings of Salomon Factory Lld were N$110,000. The draft balance sheets of the two enterprises as at 31 December 2017 were as follows: Assets Non-current assets: Omaheke Salomon Manufacturers Factory Ltd Lld N$ 000 N$ 000 Property 1,750 1,340 Plant and equipment 930 620 Investment in Lia 1,400 – 4,080 1,960 370 260 410 250 110 20 890 530 4,970 2,490 2,200 1,200 200 100 1,320 200 3,720 1,500 820 740 350 240 80 10 430 250 4,970 2,490 Current assets: Inventory Trade receivables Cash Total assets Equity and liabilities…
- Question 1 On January 2020, RITZ Ltd acquired 80% of the ordinary shares of AUGE Ltd. The group accountant has calculated that the goodwill arising on acquisition was GH₵8,000,000. However, the financial controller has uncovered a number of errors and requires advice about how to resolve them. No entries have been posted in respect of contingent cash consideration that work be paid in 2025 if AUGE meets targets. The contingent consideration had a fair value of GH₵800,000 at acquisition and was calculated using a discount rate of 10% No fair value adjustment has been recorded in respect of AUGE’s non-depreciable land. This land had a carry amount of GH400,000 at acquisition and a fair value of GH₵600,000. AUGE’s brand is internally generated and has not been recognized in the consolidated financial statement. At acquisition it had a fair value of GH₵1,000,000 and a remaining estimated useful life of 5 years. Acquisition cost of GH₵100,000 incurred towards the acquisition process has…Question:The following is the extract from trial balance of G Limited, subsidiary of Y Limited for the year ended 31 December 2021. Dr CrInventory on hand: 31/12/2020 50 000 Sales 1025000Purchases 350 000 Depreciation 25 000 Rent income 40 000Dividend paid 11 000 Other expenses 300 000 Income tax expense 145 000 Additional information: 1. Y Limited acquired its interest in G limited on the 1 st May 2021. 2.The average monthly sales of G Limited accrued evenly throughout the year.…Question Insolvency Charle the Cheap Ltd went into voluntary liquidation on 30 June 2021. Its stammarised statement of financial position at that date is as follows Equity Share capital Total equity (11) Charle the Cheap Ltd Statement of Financial Position As at 30 June 201 Current assets Date 48 000 Cash (Transfer cash) Inventory Non current assets Land Total assets Current liabilities Payables 48 000 Net assets All assets realised amounted to $48 000. Payables allowed an $800 discount Costs of liquidation were $5 000. Required 0 (Realisation of assets) Complete the journal entries to liquidation. The narrations for the journal entries have been provided to you as additional guidance. fi RECESS Record the entries in the Liquidation account, the Liquidators receipts & payments, and the Shareholders distribution account. (daa ne. Journal for your answer to question 4 part (1). Expand the table as needed to contain your answer. Account (Transfer of carrying amounts) (Record expenses of…
- Question-4 H Ltd acquired 80% of S Ltd several years ago for Rs. 30 million. The balance on S Ltd's retained earnings was Rs. 5,000,000 at the date of acquisition. H Ltd's policy is to measure non-controlling interest at the date of acquisition as a proportionate share of net assets. The draft statements of financial position of the two companies at 31 December 20X1 are: H (Rs. 000) 45,000 30,000 28,000 103,000 Non-current assets: Property, plant and equipment Investment in S Current assets Total assets Equity Share capital Retained earnings Non-current liabilities Current liabilities Total equity and liabilities 5,000 76,000 81,000 2,000 20,000 103,000 Required: Prepare a consolidated statement of financial position as at 31 December 20X1. S (Rs. 000) 15,000 12,000 27,000 1,000 10,000 11,000 6,000 10,000 27,000E3.5 Acquisition analysis, including fair value adjustment for plant and equipment (Section 3.6.2) On 1 October 20XO, EF Ltd acquired all the issued ordinary shares of GH Ltd. The terms of the acquisition agreement specified that EF Ltd must pay the existing shareholders of GH Ltd $1.5million immediately and a further $1.5million on 30 September 20X1. The incremental cost of short-term finance to EF Ltd is 10% p.a. At acquisition date, the issued capital and reserves of GH Ltd were as follows: Issued capital 1 200000 Retained eamings 1/10/20X0 1400000 At 1 October 20xO, the plant and equipment of GH Ltd had a carrying amount that was $150000 less than its fair value. The company income tax rate is 30%. REQUIRED (a) Prepare the general journal entries for the accounting records of EF Ltd to record: (i) the investment in GH Ltd on 1 October 20X0 (ii) the cash payment of the $1500 000 on 30 September 20X1.Question 3: Prepare acquisition analysis and Consolidation worksheet entries Syd Ltd acquired all the issued shares (Cum-div.) of Mel Ltd on 1 July 2020. At this date the financial position of Matt Ltd was as follows: Carrying Amount Fair ValuePlant $300 000 270 000Accumulated Depreciation (60 000) Account Receivables 25 200 25 200Cash 15 000 15 000Inventories 15 600 19 600295 800 Share Capital 220 000 General Reserve 23 400 Retained Earnings 24 200 Provisions of Employee benefits 19 200 19 200Dividend Payable 9 000 9 000295 800 Additional information: The assets of Mel Ltd did not include a patent that was valued by Syd Ltd at $12 000. Its useful life was considered to be 6 years, with benefits being received equally over that period. The plant was considered to have a further 10-year life and is depreciated on a straight-line basis. All the pre-acquisition inventories were not sold by 30 June 2021. An interim dividend of $10,000 paid by Mel Ltd in September 2020. Syd Ltd declared a…
- sub parts to be solved a) Liala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The following transactions occurred between the two entities: On 1 June 2016, Liala Ltd sold inventory to Jordan Ltd for $12,000, this inventory previously costed Liala Ltd $10,000. By 30 June 2016, Jordan Ltd had sold 20% of this inventory to other entities for $3,000. The other 80% was all sold to external entities by 30 June 2017 for $13,000. During the 2016–17 period, Jordan Ltd sold inventory to Liala Ltd for $6,000, this being at cost plus 20% mark-up. Of this inventory, 20 % remained on hand in Liala Ltd at 30 June 2017. The tax rate is 30%. b) On 1 July 2016, Liala ltd sold an item of plant to Jordan Ltd Ltd for $150,000 when its carrying value in Liala Ltd book was $200,000 (costs $300,000, accumulated depreciation $100,000). This plant has a remaining useful life of five (5) years form the date of sale. The group measures its property plants and equipment using a costs…According to IFRS 10 one of the first adjustments which should be made in consolidated statements is the elimination of the investment in the parent’s books and the owners’ equity section in the subsidiary’s books as at the date of acquisition Statements of Financial Position as at 30 June 2008: A Ltd B Ltd ASSETS R R Investment in B Ltd: 10 000 Ordinary shares at fair value 10 000 - Cash and cash equivalents 10 000 10 000 20 000 20 000 EQUITY AND LIABILITIES Share capital -20 000 ordinary shares 20 000 - -10 000 ordinary shares - 10 000 20 000 10 000 In A Ltd group consolidated statement of financial position how much will be recognised as share capital? Select one: a. R10 000 b. R40 000 c. R30 000 d. R20 000PROBLEM 15 At the beginning of 2018, ESARiDe. Corporetion purchesed 406 of the ordinery shares outstanding of Mary Grece Incorporeted for P15,000.000 when the net assets of Mary Grece Incorporeted amounted to P30,000,000. At the acquisition dete, the carrying amounts of the identifieble assets and liebilities of Mary Grece Incorporeted were equel to their teir value, except for the following: Equipment whose air value was P7.000.000 greater than its carrying amount. b. Inventory whose tair velue wes P200.000 greeter then its carrying amount. a. The equipment hes a remaining lite of 4 years, and the inventory wes all sold during 2013. Mary Grace Incorporated has two classes of shares: Ordinary shares (par vale, P100). 300,000 shares outstanding 15% cumalative preference shares (gar valse, PS0). 100.00 shares outstanding The investee reported the following net income finclusive of enter-company transactions) and payment of cash dividend: 2018 2019 Net income 20,000,000 35,000,000…