HELLO, I WOULD NEED 1 AND 2 OUT OF THE REQUIRED. A FULL AND PARTIAL AQUISITION METHOD.
Required:
1. Determine the gain on bargain purchase or goodwill as at acquisition date using the full goodwill method. Assume the fair value of the Non-controlling interest at 1 July 2015 was $14,100. (3 marks)
2. Determine the gain on bargain purchase or goodwill as at acquisition date using the partial goodwill method. (2 marks)
lQuestion 3 [35 Harts] 00 1 July 2015, Cross Ltd acquired T5% of the issued shares of How Ltd for $45,000 on an ex div basis. At this date, Bow Ltd's liabilities included a dividend payable of $2,000 and the assets included goodwill of $1,000. The following equity balances appeared in the records of Bow Ltd at this date: Share capital $20,000 General reserve 2,000 Retained ea rnings 10,000 At 1 July 2015, all the identiable assets and liabilities of Bow Ltd were recorded at fairvalue except for the following: Carrying amount Fair 1value Machinery {cost $35,000] $30,000 $40,000 Plant {cost $15,000} 12,000 13,000 Inventories 10,000 20,000 Receivables 20,000 10,000 Additional information: 1. The machinery had a remaining useful life of 5 years at 1 July 2015, with benefits to be received on a straight-line basis over the period. This machinery was sold by Bow Ltd to an external entity on 1 January 2020 for $4,000. 2. The plant had a useful life of 0 years, with benefits also received on a straight-line basis over the period. The plant was stillon hand as at 30 June 2020. 3. By 30 June 2010, receivables had all been collected and inventories sold. 4. The movement to the lGeneral reserve was from Retained earnings on hand at 1 July 2015. 5. During the year ended 30 June 2020, Bow Ltd sold 540,000 of inventory to Cross Ltd at a markup 0f 25% on cost. $10,000 of this inventory remains unsold by 30 June 2020. 0. At 1 July 2019, inventories of Cross Ltd included goods of $1,000 resulting from a sale on 1 March 2010I of non-current assets by How Ltd at a beforetax profit of $200. These items were on-sold to external entities by Cross Ltd 011 1 September 2010. This class of non- current assets is depreciated using a 10% per year depreciation rate on a straight-line basis. lQuestion 3 [35 Harts] 00 1 July 2015, Cross Ltd acquired T5% of the issued shares of How Ltd for $45,000 on an ex div basis. At this date, Bow Ltd's liabilities included a dividend payable of $2,000 and the assets included goodwill of $1,000. The following equity balances appeared in the records of Bow Ltd at this date: Share capital $20,000 General reserve 2,000 Retained ea rnings 10,000 At 1 July 2015, all the identiable assets and liabilities of Bow Ltd were recorded at fairvalue except for the following: Carrying amount Fair 1value Machinery {cost $35,000] $30,000 $40,000 Plant {cost $15,000} 12,000 13,000 Inventories 10,000 20,000 Receivables 20,000 10,000 Additional information: 1. The machinery had a remaining useful life of 5 years at 1 July 2015, with benefits to be received on a straight-line basis over the period. This machinery was sold by Bow Ltd to an external entity on 1 January 2020 for $4,000. 2. The plant had a useful life of 0 years, with benefits also received on a straight-line basis over the period. The plant was stillon hand as at 30 June 2020. 3. By 30 June 2010, receivables had all been collected and inventories sold. 4. The movement to the lGeneral reserve was from Retained earnings on hand at 1 July 2015. 5. During the year ended 30 June 2020, Bow Ltd sold 540,000 of inventory to Cross Ltd at a markup 0f 25% on cost. $10,000 of this inventory remains unsold by 30 June 2020. 0. At 1 July 2019, inventories of Cross Ltd included goods of $1,000 resulting from a sale on 1 March 2010I of non-current assets by How Ltd at a beforetax profit of $200. These items were on-sold to external entities by Cross Ltd 011 1 September 2010. This class of non- current assets is depreciated using a 10% per year depreciation rate on a straight-line basis. asset revaluation surplus {lilting} 3,000 2.001] Grainsfilosses] on pro perty revaluation 1,000 500 Asset revaluation surplus {serene} coon 2.on Required: 1. Determine the gain on bargain purchase or goodwill as at acquisition date using the full goodwill method. Mao me the fair 1uralue of the Non-co ntroliing intentst at 1 July 2!] 15 was $14.1oo. {3 marks] 2. Determine the gain on bargain purchase or goodwill as at acquisition date using the partial goodwill method. {2 merits] 3. Prepare the consolidation journal entries for lCross Ltd usingthe partial goodwill method at 1 July EDIE, immediately after acquisition. {1' marks] 4. Preoare the consolidation journal entries for Cross Ltd using the partial goodwill method at so June man. {13 merits] Motto: 'r'our consolidation journal entries for Required 4 should he orepa red in the following format: {a} Business combination 'raluatlon entries at 3!) June 20215 {b} Pre-acquisition entries at 3!] June soon to} MCI share of equity at 1 Jul}! EDIE {d} HEI share of equity changes from 1 .Iul1.r lots to 30 June lots to} MCI share of eouitjir changes from 1 July lots to 3D June into {ti Intragroup transaction adjustments required as at 3'3 June 2020 Question 3 [35 Marks] 0n 1 July 2015, Cross Ltd acquired 75% of the issued shares of ow Ltd for $5,000 on an exdiv basis. At this date, Bow Ltd's liabilities inctuded a dividend payable of $2,000 and theassels included goodwill of $1,000. The following equity balances appeared in the records of How Ltd atthis date: Share capital $20,000 General reserve 2,000 Retained earnings 10,000 m 1 Juiy 2015. all the identiable assets and liabilities of How Ltd were recorded at fair value except for the foliowing: Carrying amount Fair value Machinery [oost 536.000] 530.000 540.000 Plant {cost $15,000} 12,000 13;!!!) Inventories 16,000 20,!!!)0 Receivables 20,000 18,!!!)0 Additional information: 1. The machinery had a remaining useful life of5 years at 1 July 2015, with benetsto be received on a straight-line basis overthe period. This machinery was sold by Bow Ltd to an extemai entity on 1 January 2020 for \"00. 2. The plant had a useful life ofB years, with benets also received on a straight-line basis over the period. The plant was still on hand as at 30 June 2020. 3. By 30 June 2016, receivables had all been collected and inventories sold. 4. The movement to the General reserve was from Retained earnings on hand at 1 July 2015. 5. During the year end ed 30 June 2020, How Ltd sold $40,000 of inventory to Cross Ltd at a mark-up of 25% on cost. $10,000 of this inventory remains unsold by 30 June 2020. E. At 1 July 2019. inventories of Cross Ltd included goods of $1,000 resulting from a sale on 1 March 2019 of noncurrent assets by Bow Ltd at a beioretax prot of 5200. These items were onsold to external entities by Cross Ltd on 1 September 2019.111is class of non- current assets is depreciated using a 10% per year depreciation rate on a mightline basis. I Wign'l'l '1". 0n 1 January 2020, Bow Ltd sold an item of plant to Cross Ltd for $2,000 at a before-tax profit of $300. For plant assets, Bow Ltd applies a 10% peryear straight-line depreciation rate, while Cross Ltd uses a 2.5% per year straight-line rate. 8. [tuning March 2020, Cross Ltd provided management services to Bow Ltd at afee of $?00 paid try 30 June 2020. 9. The tax rate is 30%. 10. Relevant na riciai information for the year ended 30 June 2020 includes the following
