On the 1/01/x3, J Group acquired 2 025 000 of the 4 500 000 ordinary R1 shares in Entity PA for R5 695000. At acquisition, PA had retained earnings of R1 400 000. When preparing the J Group's consolidatedfinancial statements for the year end date of 31/12/x3, accountants at the group entity are working with thefollowing information: In the x3 financial year, Entity PA made a profit after tax of R 1 230 000; In the x3financial year, PA paid a dividend totaling R45 000 to its shareholders; At the end of the x3 financial year,the group's investment in PA is found to have impaired by R94 000. Based on this information, calculatethe group's investment in associate figure, in its consolidated financial statements dated 31/12/x3.

The objective of the question is to calculate the group's investment in associate figure in its…

Answered: On the 1/01/x3, J Group acquired 2 025…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On 1 July 2021, James Ltd acquired all the issued shares of Dean Ltd for $350,000. At this date, the financial statements of Dean Ltd showed the following: $ Share capital 270,000 Retained earnings 26,500 General Reserve 8,800 Total equity 305,300 Goodwill 25,000 At acquisition date, all the net identifiable assets and liabilities in Dean Ltd were recorded at amounts equal to their fair value except for: Asset Carrying amount ($) Fair Value ($) Inventories 15,000 18,000 Plant (cost $400,000) 210,000 220,000 The Plant was calculated to have a further life of 5 years, and was depreciated on a straight-line basis. All inventory was sold by 30 June 2020. Assume 30% tax rate Required: Prepare the acquisition analysis at 1 July 2021. Prepare the consolidation entries at acquisition date, 1 July 2021. Include narrations for each entry. Prepare the consolidation worksheet as at 1 July 2021. Prepare a Balance sheet for the reporting Group, James Ltd as at 1 July 2021 in narrative format.
At the beginning of the current year, an entity acquired 40% of the ordinary shares of an associate. On such date, assets and liabilities of the investee were recorded at fair value and the acquisition showed that goodwill of P1,000,000 was acquired. The investee reported net income of P8,000,000 for the current year. In December, the investee sold inventory costing P3,000,000 to the investor for P5,000,000. The inventory remained unsold by the investor at year-end. At the beginning of the current year, the investee sold equipment to the investor with a carrying amount of P2,500,000 for P4,000,000. The remaining life of the equipment is 5 years. What amount of investment income should be reported for the current year? a. 1,920,000 b. 1,800,000 c. 3,200,000 d. 2,400,000 Problem 4 An entity owned 100% of another entity’s preference shares and 20% of ordinary shares. The investee’s share capital outstanding at year-end included P5,000,000 of 10% cumulative preference…
On December 31, Year 1, P Company obtains control over the net assets of S Company by purchasing 100% of the ordinary shares of S Company. P Company paid for the purchase by issuing ordinary shares with a fair value of $44,000. In addition, P Company paid $1,000 for professional fees to facilitate the transaction. The following information has been assembled just prior to the acquisition date: Show Transcribed Text Goodwill Plant assets (net) Current assets Shareholders' equity Long-term debt Current liabilities Show Transcribed Text (i) the acquisition method (ii) the new-entity method Carrying Amount $ 80,000 50.000 $130,000 $ 75,000 25,000 30.000 3 $130,000 ü P Company 3 Fair Value $ 38,000 90,000 55,000 $ 183,000 $ 29,000 30,000 Carrying Amount $ 20.000 15,000 $35.000 $18,000 7,000 10,000 S Company $35,000 Fair Value $ 22,000 26,000 14.000 $ 62,000 $ 8,000 10,000 Required (a) Prepare a consolidated statement of financial position for P Company and calculate the debt-to-equity ratio…
On January 1, 2023, Andrei Company acquired 40% of the ordinary shares of an associate. On such date, assets and liabilities of the investee were recorded at fair value and the acquisition showed that goodwill of P1,000,000 was acquired. The investee reported net income of P8,000,000 for 2023. In December 2023, the investee sold inventory costing P3,000,000 to Andrei Company for P5,000,000. The inventory remained unsold by Andrei Company on December 31, 2023. On January 1, 2023, the investee sold an equipment to Andrei Company with carrying amount of P2,500,000 for P4,000,000. The remaining life of the equipment is 5 years. What amount of investment income should be reported by Andrei Company for 2023?
RIVERDALE paid finder's fees of P80,000, legal fees of P26,000, audit fees related to stock issuance of P20,000, stock registration fees of P10,000 and stock listing application fees of P8,000. Based on the given information, under the acquisition method, what amount relating to business combination would be charged to expense?
The following information relates to Adele Ltd. Since the date of acquisition, Adele Ltd has held interests in multiple subsidiaries totalling DNCI of 25%, and INCI of 15%. The following summarised financial information is provided: Retained earnings at DOA $236,000 Retained earnings at 1/7/2020 $476,000 Current period profit for year ended 30/6/2021 $117,000 a) Based on the financial information you have available, prepare the journal entries to record the allocation to NCI upon consolidation on 30 June, 2021.
DEF company acquired the assets and assumed liabilities of GHI Company on January 1, 2022 by paying P3,000,000 and issuing its own ordinary shares. The comparison of the acquirer’s balance sheet before and after business combination transaction is as follows: Balance sheet before Acquisition Balance Sheet after Acquisition Total Assets 13,545,000 17,595,000 Total Liabilities 3,760,000 ? Total SHE 9,785,000 ? The fair value of the identifiable net asset of the acquiree is P4,835,000 and the book value of acquiree’s liabilities amounting to P1,300,000 is lower compared to its fair value by P350,000. DEF company paid acquisition related costs amounting to P50,000. What is the fair market value of the ordinary shares issued by the acquirer? a. 2,500,000 b. 2,400,000 c. 2,480,000 d. 2,450,000
On January 1, 2024, Coronado Company purchased 8,208 shares of Whispering Company's common stock for $124,000. Immediately after the stock acquisition, the statements of financial position of Coronado and Whispering appeared as follows: Assets Cash Accounts receivable Inventory Investment in Whispering Company Plant assets Accumulated depreciation-plant assets Total (b) Liabilities and Owners' Equity Current liabilities Prepare a consolidated balance sheet workpaper as of January 1, 2024. Mortgage notes payable Common stock, $10 par value Other contributed capital Retained earnings Total Cash Accounts Receivable Inventory Investment in Whispering Total Difference between Implied and Book Value Plant Assets Accumulated Depreciation Current Liabilities Mortgage Note Payable Common Stock: Coronado Company Whispering Company Other Contributed Capital Coronado Company Whispering Company Total Retained Earnings: Coronado Company Whispering Company Noncontrolling Interest 38,250 Coronado…
On January 1, year 2, ABC Company exchanged 150,000 shares of its P20 par value common stock for all of XYZ's net assets. Both corporations continued to operate as separate businesses, maintaining accounting records with years ending December 31. ABC uses the equity method to account for its investment in XYZ. Information from separate company operations follows: Retained earnings-12/31/Y1 (ABC) P3,200,00 and (XYZ) P925,000; Net income - six months ended 6/30/Y2 (ABC) P800,000 and (XYZ) P275,000; Dividends paid-3/25/Y2 by ABC was P750,000. What amount of retained earnings would ABC reports in its June 30, year 2 consolidated balance sheet?
On January 1, year 2, ABC Company exchanged 150,000 shares of its P20 par value common stock for all of XYZ's net assets. Both corporations continued to operate as separate businesses, maintaining accounting records with years ending December 31. ABC uses the equity method to account for its investment in XYZ. Information from separate company operations follows: Retained earnings-12/31/Y1 (ABC) P3,200,00 and (XYZ) P925,000; Net income - six months ended 6/30/Y2 (ABC) P800,000 and (XYZ) P275,00O; Dividends paid-3/25/Y2 by ABC was P750,000. What amount of retained earnings would ABC reports in its June 30, year 2 consolidated balance sheet? * Your answer
On 1 July 2019, Christina Ltd acquired all the issued shares of Adeline Ltd, paying $120 000 cash and transferring 100 000 of its own shares to Adeline Ltd’s former shareholders. At that date, the financial statements of Adeline Ltd showed the following information. Share Capital $100000 General Reserve 50000 Retained Earnings 150000 All the assets and liabilities of Adeline Ltd were recorded at amounts equal to their fair values at the acquisition date. The fair value of Christina Ltd’s shares at acquisition date was $2 per share. Christina Ltd incurred $30 000 in acquisition‐related costs that included $5000 as share issue costs. Required Prepare the acquisition analysis at 1 July 2019. Prepare the journal entries for Christina Ltd to recognise the investment in Adeline Ltd at 1 July 2019. Prepare the consolidation worksheet entries for…
On January 1, year 2, ABC Company exchanged 150,000 shares of its P20 par value common stock for all of XYZ's net assets. Both corporations continued to operate as separate businesses, maintaining accounting records with years ending December 31. ABC uses the equity method to account for its investment in XYZ. Information from separate company operations follows: Retained earnings-12/31/Y1 (ABC) P3,200,000 and (XYZ) P925,000 Net income-six months ended 6/30/Y2 (ABC) P800,000 and (XYZ) P275,000 Dividends paid-3/25/Y2 by ABC was P750,000 What amount of retained earnings would ABC reports in its June 30, year 2 consolidated balance sheet? The answer is 3,250,000. How is this solved?

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