Question
On 1 July 2012 Sarah Ltd acquires all the shares in Jane Ltd for $707,000 cash The financial statements of Jane Ltd as at 1
On 1 July 2012 Sarah Ltd acquires all the shares in Jane Ltd for $707,000 cash
The financial statements of Jane Ltd as at 1 July 2012 shows the following:
Retained earnings 197,000
Share capital 259,000
The tax rate is 30%
At the date of acquisition all the net assets of Jane Ltd are at fair value except for the following:
| Carrying amount | Fair value |
Equipment (cost $257,000) | $101,000 | $142,000 |
The equipment has a further 18 years of useful life.
All consolidation entries on 30 June 2017 are shown below:
Dr. Retained earnings | $197,000 |
|
Dr. Share capital | $259,000 |
|
Dr. BCVR |
|
|
Dr. Goodwill |
|
|
Cr. Investment in Jane Ltd |
| $707,000 |
Dr. Accumulated depreciation | 257,000 101,000 |
|
Dr.(or Cr.) Equipment |
|
|
Cr. BCVR |
| ( 142,000 101,000 ) x 70% |
Cr. DTL |
| ( 142,000 101,000 ) x 30% |
Dr. Retained earnings | xxx |
|
Dr. Depreciation expense | ( 142,000 101,000 ) / 18 |
|
Cr. Accumulated depreciation |
|
|
Dr. DTL |
|
|
Cr. Income tax expense |
| ( 142,000 101,000 ) x 30% / 18 |
Cr. Retained earnings |
|
|
Complete the consolidation journals above and enter the amount of xxx (retained earnings) in the answer block below:
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