Answered step by step
Verified Expert Solution
Question
1 Approved Answer
On 1 Jan 2018, Sculptor Ltd acquired all the share capital of Virgo Ltd, giving in exchange 50000 shares in Sculptor Ltd, these having a
On 1 Jan 2018, Sculptor Ltd acquired all the share capital of Virgo Ltd, giving in exchange 50000 shares in Sculptor Ltd, these having a fair value at acquisition date of $5 per share. On the same date, Sculptor Ltd appointed five directors in Virgo. The first meeting of the board of directors was held on 3 Jan 2018, in which the directors made decision about the relevant activities of Virgo On that date, the share price of Sculptor Ltd became $6 per share. Costs incurred in undertaking the acquisition amounted to $10000. At 1 Jan 2018, the statement of financial position of Virgo Ltd was as follows: The recorded amounts of the identifiable assets and liabilities of Virgo Ltd at the acquisition date were equal to their fair values except that Virgo Ltd had not recorded an internally developed trademark which satisfied the recognition criteria. External valuer estimate the fair valie trademark to be $20000. It was assumed to have a 4-year life. The tax rate is 30%. Required 1. Show the journal entries in the separate financial statements of Sculptor Ltd and determine the cost of investment in Virgo Ltd. 2. Calculate the goodwill or gain on bargain purchase for the acquisition of Virgo Ltd. 3. Prepare the consolidation entries for the preparation of consolidated financial statements at 1 Jan 2018. 4. Explain and justify if the internally developed trademark should be capitalized in the individual and group financial statements. 5. Prepare the consolidation entries for the preparation of consolidated financial statements at 31 Dec 2021. Remark: no consolidation spreadsheet is required
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