1.Impairment of assets

BeachLtdhas determined that is glassware division is a cash-generating unit. Thecarrying amounts of the assets at30June2013are as follows:

Factory $105,000

Land 75,000

Equipment 60,000

Inventory 30,000

Beach Ltd calculated the recoverable amount of the division to be$255,000.

Required:

Provide the journal entry for the impairment loss, assuming that the fair value less costsof disposal of the landis$72,500. (10 marks)

2.Consolidations:100%Parent holding

On1July2012,Court Ltd acquired all of the sharecapital of Moot Ltd for

$1,713,700.At this dateMootLtd'sequitycomprised:

Share Capital (100,000$12 Shares) $1,200,000

General Reserve 200,000

Retained Earnings 105,600

All identifiable assets and liabilities ofMoot Ltd were recorded at fair value except for thefollowing assets

Carrying amountFair value

Inventory $92 000 $100 000

Plant (cost $170 000) 115 000 140 000

All of the inventory was sold by30June2013.The plant isexpected to have a further5yearlife and depreciation is calculated on a straight line basis. Whenrevalued assets are sold orfullyconsumed,anyrelated revaluation surplus is transferred to retained earnings.

The tax rate is30%.

Required:

Prepare the calculation of goodwill and consolidated worksheet entries at30June2013forthe preparation of the consolidated financial statements of Court Ltd.(8marks)

3. Business Combinations

LowerLtd acquired the assets and liabilities ofHigherLtd on1July2014.These net assetsmeasured at fair value consisted of:

Equipment $ 50,000

Land 80,000

Trucks 40,000

Current assets 10,000

Current liabilities (16,000)

Required:

Prepare the journal entries inLower Ltd to record this business combination assuming that,toacquire these net assets,Lower Ltd:

A)issued100,000shares at$1.80per share(6 Marks)

B)issued100,000shares at$1.60per share.(4marks)

1. Impairment of assets Beach Ltd has determined that is glassware division is a cash-generating unit. The carrying amounts of the assets at 30 June 2013 are as follows: Factory Land Equipment Inventory $105,000 75,000 60,000 30,000 Beach Ltd calculated the recoverable amount of the division to be $255,000. Required: Provide the journal entry for the impairment loss, assuming that the fair value less costs of disposal of the land is $72,500. (10 marks) 2. Consolidations: 100% Parent holding On 1 July 2012, Court Ltd acquired all of the share capital of Moot Ltd for $1,713,700. At this date Moot Ltd's equity comprised: Share Capital - 100,000 $12 Shares General Reserve Retained Earnings $1,200,000 200,000 105,600 All identifiable assets and liabilities of Moot Ltd were recorded at fair value except for the following assets Inventory Plant (cost $170 000) Carrying amount $92 000 115 000 Fair value $100 000 140 000 All of the inventory was sold by 30 June 2013. The plant is expected to have a further 5 year life and depreciation is calculated on a straight line basis. When revalued assets are sold or fully consumed, any related revaluation surplus is transferred to retained earnings. The tax rate is 30%. Required: Prepare the calculation of goodwill and consolidated worksheet entries at 30 June 2013 for the preparation of the consolidated financial statements of Court Ltd. (8 marks) 3. Business Combinations Lower Ltd acquired the assets and liabilities of Higher Ltd on 1 July 2014. These net assets measured at fair value consisted of: Equipment $ 50,000 Land 80,000 Trucks 40,000 Current assets 10,000 Current liabilities (16,000) Required: Prepare the journal entries in Lower Ltd to record this business combination assuming that, to acquire these net assets, Lower Ltd: A) issued 100,000 shares at $1.80 per share (6 Marks) B) issued 100,000 shares at $1.60 per share. (4 marks)