Question
Information relevant to questions 25 and 26 On 1 April 2017 Root acquired 116 million of Branch's 145 million ordinary shares for an immediate cash
Information relevant to questions 25 and 26
On 1 April 2017 Root acquired 116 million of Branch's 145 million ordinary shares for an immediate cash payment of GHS210 million and issued at par one 10% GHS100 loan note for every 200 shares acquired. At the date of acquisition Branch owned a recently built property that was carried at its depreciated construction cost of GHS62 million. The fair value of this property at the date of acquisition was GHS82 million and it had an estimated remaining life of 20 years. Branch also had an internally-developed brand which was valued at the acquisition date at GHS25 million with a remaining life of 10 years. The inventory of Branch at 31 March 2019 includes goods supplied by Root for a sale price of GHS56 million. Root adds a mark-up of 40% on cost to all sales.
1.What will be the amount of the adjustment to group retained earnings at 31 March 2019 in respect of the movement on the fair value adjustments?
A.GHS7 million B. GHS3.5 million 7 C. GHS5.6 million D. GHS2.8 million 26.
2.How should the unrealised profit be posted?
A. DR Cost of sales / CR Inventories B. DR Cost of sales / DR Non-controlling interest / CR Inventories C. DR Inventories / CR Cost of sales D. DR Inventories / CR Non-controlling interest / CR Cost of sales
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started