Unicorn Ltd acquired 80% of the issued shares of Pegasus Ltd for $685,700 on 1 July 2020. The financial statements of Pegasus Ltd showed the following items of equity: Share capital $565,500 Retained earnings $247,400 At acquisition date all the identificable assets and liabilities of Pegasus Ltd were recorded at amounts equal to fair value except for the following: Carrying amount Fair value Land $395,900 $424,100 During the year end 30 June 2021, Pegasus Ltd recorded at profit of $84,800. The tax rate is 30%. Required: Show the acquisition analysis as at 1 July 2020 and prepare the consolidated worksheet entries at 30 June 2021 for Unicorn Ltd assuming that it adopts the partial goodwill method.
Unicorn Ltd acquired 80% of the issued shares of Pegasus Ltd for $685,700 on 1 July 2020. The financial statements of Pegasus Ltd showed the following items of equity: Share capital $565,500 Retained earnings $247,400 At acquisition date all the identificable assets and liabilities of Pegasus Ltd were recorded at amounts equal to fair value except for the following: Carrying amount Fair value Land $395,900 $424,100 During the year end 30 June 2021, Pegasus Ltd recorded at profit of $84,800. The tax rate is 30%. Required: Show the acquisition analysis as at 1 July 2020 and prepare the consolidated worksheet entries at 30 June 2021 for Unicorn Ltd assuming that it adopts the partial goodwill method.
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter8: Investing Activities
Section: Chapter Questions
Problem 22PC
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Question
| Unicorn Ltd acquired 80% of the issued shares of Pegasus Ltd for $685,700 | ||||
| on 1 July 2020. The financial statements of Pegasus Ltd showed the following items of equity: | ||||
| Share capital | $565,500 | |||
| $247,400 | ||||
| At acquisition date all the identificable assets and liabilities of Pegasus Ltd were recorded at | ||||
| amounts equal to fair value except for the following: | ||||
| Carrying amount | Fair value | |||
| Land | $395,900 | $424,100 | ||
| During the year end 30 June 2021, Pegasus Ltd recorded at profit of $84,800. | ||||
| The tax rate is 30%. | ||||
| Required: | ||||
| Show the acquisition analysis as at 1 July 2020 and prepare the consolidated worksheet | ||||
| entries at 30 June 2021 for Unicorn Ltd assuming that it adopts the partial |
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