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 Shareholders' equity Share capital General reserve Retained earnings Total shareholders' equity 450,000 45,000 140,000 635,000 180,000 25,000 20,000 225,000 Assets Current assets Cash at Bank Accounts Receivable 50,000 20,000 100.000 170,000 30,000 10,000 25.000 65,000 Inventory Non-current assets Investment in Wing Ltd Land Plant & Equipment 270,000 250,000 100,000 620.000 790.000 200,000 80.000| 280.000 345.000 Total assets Liabilities Current liabilities Accounts Payable Interest Payable 40,000 10,000 15.000 L.000 55,000 18,000 Non-current liabilities Bank loan Total liabilities Net assets 100,000 155,000 635,000 102,000 120,000 225,000 Required 1. Calculate Goodwill (show workings) 2. Prepare consolidation journal entry at the date of acquisition. 3. Prepare consolidation worksheet. 4. Prepare the consolidated statement of financial position as at 1 July 2011 (immediately after the
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 Shareholders' equity Share capital General reserve Retained earnings Total shareholders' equity 450,000 45,000 140,000 635,000 180,000 25,000 20,000 225,000 Assets Current assets Cash at Bank Accounts Receivable 50,000 20,000 100.000 170,000 30,000 10,000 25.000 65,000 Inventory Non-current assets Investment in Wing Ltd Land Plant & Equipment 270,000 250,000 100,000 620.000 790.000 200,000 80.000| 280.000 345.000 Total assets Liabilities Current liabilities Accounts Payable Interest Payable 40,000 10,000 15.000 L.000 55,000 18,000 Non-current liabilities Bank loan Total liabilities Net assets 100,000 155,000 635,000 102,000 120,000 225,000 Required 1. Calculate Goodwill (show workings) 2. Prepare consolidation journal entry at the date of acquisition. 3. Prepare consolidation worksheet. 4. Prepare the consolidated statement of financial position as at 1 July 2011 (immediately after the
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 30E
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Transcribed Image Text: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
Shareholders' equity
Share capital
General reserve
Retained earnings
Total shareholders' equity
450,000
45,000
140,000
635,000
180,000
25,000
20,000
225,000
Assets
Current assets
Cash at Bank
Accounts Receivable
50,000
20,000
100.000
170,000
30,000
10,000
25.000
65,000
Inventory
Non-current assets
Investment in Wing Ltd
Land
Plant & Equipment
270,000
250,000
100,000
620.000
790.000
200,000
80.000|
280.000
345.000
Total assets
Liabilities
Current liabilities
Accounts Payable
Interest Payable
40,000
10,000
15.000
L.000
55,000
18,000
Non-current liabilities
Bank loan
Total liabilities
Net assets
100,000
155,000
635,000
102,000
120,000
225,000
Required
1. Calculate Goodwill (show workings)
2. Prepare consolidation journal entry at the date of acquisition.
3. Prepare consolidation worksheet.
4. Prepare the consolidated statement of financial position as at 1 July 2011 (immediately after the
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