Question
On 1 July 2020 P Ltd purchased 100% of the issued capital of S Ltd for a purchase price of $943,000. At that date the
On 1 July 2020 P Ltd purchased 100% of the issued capital of S Ltd for a purchase price of $943,000. At that date the shareholders equity of S Ltd disclosed:
Share capital $136,000
General reserve $117,000
Retained earnings $172,000
Additional information:
- At the date of acquisition, all net identifiable assets of Sub Ltd were recorded at fair value
- S borrowed $177,000 from P during the financial year. Interest is 8% per annum of which S has paid $5664 before 30 June 2022.
- Company tax rate is 30%
The consolidation journal entries (partial) are listed below:
| 30 June 2022 |
|
|
|
| Share capital |
| $136,000 |
|
| General reserve |
| $117,000 |
|
| Retained earnings |
| $172,000 |
|
| Goodwill |
| $518,000 |
|
|
| Investment in S |
| $943,000 |
|
|
|
|
|
| Loan payable |
| $177,000 |
|
|
| Loan receivable |
| $177,000 |
|
|
|
|
|
| Interest revenue |
| $14160 |
|
|
| Interest expense |
| $14160 |
|
|
|
|
|
| Interest payable |
| $ xxx |
|
|
| Interest receivable |
|
|
|
|
|
|
|
Enter the amount of xxx in the answer space below:
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Contemporary Auditing E4 Im
Authors: KNAPP
4th Edition
0324048602, 978-0324048605
