1. On the date of acquisition, the carrying amount of Casper Ltd’s assets and liabilities were deemed equal to the fair value thereof. Each share of Casper Ltd carries one vote and voting rights alone determine control. On the acquisition date, CasperLtd’s equity consisted of: Ordinary Share Capital R300 000 Retained earnings R 1 700 000 Other Componenets of equity. R95 200 It is group policy to show goodwill at cost les
Metropolis Ltd and Casper Ltd are both crypto currency developers. The companies are situated in South Africa. On 1 January 2019, Metropolis Ltd acquired 80% of the shares in Casper Ltd. The financial year-end of both companies is 31 December. Below is an extract from the
Additional information
1. On the date of acquisition, the carrying amount of Casper Ltd’s assets and liabilities were deemed equal to the fair value thereof. Each share of Casper Ltd carries one vote and voting rights alone determine control. On the acquisition date, CasperLtd’s equity consisted of:
Ordinary Share Capital R300 000
Other Componenets of equity. R95 200
It is group policy to show
The issued share capital of both companies remained unchanged since acquisition.
2.Both companies bank at Hope Bank. Metropolis Ltd and Casper Ltd did not guarantee overdraft bank accounts to one another should one of them default.
3.The intragroup loan was included in trade and other receivables and trade and other payables respectively. The loan amounts to R200 000. Casper Ltd granted the loan to Metropolis Ltd. The loan is payable in the next twelve months and therefore classified as trade and other receivables and payables respectively.
4.Assume that the profit after tax for the current financial year amounts to R2 073 600 for Casper Ltd.
| Credits | Metropolis LTD | Casper LTD | |
| Share Capital- Ordinary shares (200 000 and 150 000 shares respectively ) | 400 000 | 300 000 | |
| Retained earnings - 1 January 2020 | 3 000 000 | 2 700 000 | |
| Other Components of equity | 163 728 | 95200 | |
| long term loan | 1 500 000 | 800 000 | |
| trade and other payables | 800 000 | 550 000 | |
| Revenue | 7 000 000 | 5 000 000 | |
| Other Income | 480 000 | 350 000 | |
| Debits | |||
| Property, Plant and equipment | 4 100 000 | 4 300 00 | |
| Investment in Casper Ltd(Costs equals fair value ) | 2 000 000 | - | |
| Inventory | 1 000 000 | 680 000 | |
| Trade and other receivables | 1 100 000 | 900 000 | |
| Bank | 369 200 | 638 800 | |
| Finance Charges | 222 400 | - | |
| Cost of sales | 2 800 000 | 2 000 000 | |
| other expenses | 700 000 | 470 000 | |
| income tax expense | 1 052 128 | 806 400 |
Property, plant and equipment amount to?
1. 7 540 000
2. 8 400 000
3. 4 100 000
4. 4 300 000
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