Question
Green Ltd purchased 80 per cent of the issued capital of Maroon for consideration of $4 000 000 and in the process gained control over
Green Ltd purchased 80 per cent of the issued capital of Maroon for consideration of $4 000 000 and in the process gained control over Maroon Ltd on 1 July 2015. The fair value of the net assets of Maroon Ltd at purchase was represented by:
Share capital
3 220 000
Retained earnings
740 000
Total
3 960 000
At acquisition date all the identifiable assets and liabilities of Maroon Ltd were recorded at amounts equal to fair value.
At 1 July 2015, the fair value of the non-controlling interest was $1 000 000 and Maroon Ltd adopts the full goodwill method.
At 30 June 2016, the equity of Maroon Ltd consisted of:
Share capital
3 220 000
Retained earnings
860 000
Total
3 960 000
During the 2015-16 financial year Maroon Ltd recorded a profit of $120 000.
Required:
a.Prepare acquisition analysis
b.Prepare the consolidated worksheet entries at 30 June 2016 for Swamp Ltd (8 marks):
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Financial Accounting Tools for Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
9th edition
1-119-49356-3, 1119493633, 1119493560, 978-1119493631
