Question
Notes: Both Traveler Limited and Data Limited did not recognise any components of other comprehensive income in the year presented.The following information is relevant:(a) Traveler
Notes: Both Traveler Limited and Data Limited did not recognise any components of other comprehensive income in the year presented.The following information is relevant:(a) Traveler Limited acquired 28,800,000 ordinary shares of Data Limited on 1 Jan 2019. The consideration paid by Traveler Limited is for $52,500,000 cash payable immediately and a further $6,050,000 after 2 years when Data Limited's retained earnings was $21,060,000. Parent's cost of capital is 10%. The acquisition related cost is $1 million. Non-controlling interests in Data Limited are measured at fair value of $11,500,000.(b) Excluding the franchise referred to below, the fair value of the identifiable net assets of Data Limited was $60 million at 1 Jan 2019. The excess of the fair value of the net assets is due to an increase in the value of non-depreciable land (included in property, plant and equipment).(c) Data Limited held a franchise right, which at 1 Jan 2019 had a fair value of $6 million. This had not been recognized in the financial statements of Data Limited. The franchise agreement had a remaining term of five years to run at that date and is not renewable. Data Limited still holds this franchise at the year-end. Amortization of franchise right is required and shall be shown under the administrative expense.(d) On 1 Jan 2021, Data Limited sold a set of computers to Traveler Limited for $1,500,000. The cost of the computers is $1,200,000 with accumulated depreciation of $240,000. Depreciation of 10% per annum is adopted for the computers.(e) During the year 2021, Traveler Limited had sold goods to Data Limited with a sales value of $250,000, including a 25% mark up on cost. At the year-end, 30% of these goods remained in stock.(f) On 31 December 2021, Traveler Limited and Data Limited declared dividend for $400,000 and $260,000 respectively and properly recognised it as a liability. Traveler Limited has not accounted for any dividend receivable from Data Limited.(g) On 31 December 2021, Data Limited had remitted $124,000 to Traveler Limited for goods received but Traveler Limited has not yet received this until 2 Jan 2022.(h) Goodwill arising on acquisition is accounted for in accordance with HKFRS 3 "Business Combinations". Following an impairment review, Traveler has decided to write off 40% of the value of goodwill arising upon the acquisition of Data as at 31 December 2021.(i) Ignore any taxation effects.Required:Prepare the consolidated statement of profit or loss and other comprehensive income of Traveler Limited for the year ended 31 December 2021 and the consolidated statement of financial position as at that date. Show the acquisition analysis, all your workings and appropriate journal entries.
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