Question
On 1 July 2021 Platform Ltd acquired the shares of Station Ltd for $375 000. At acquisition date the recorded equity of Station Ltd consisted
On 1 July 2021 Platform Ltd acquired the shares of Station Ltd for $375 000. At acquisition date the recorded equity of Station Ltd consisted of:
Share Capital $230 000
General Reserve 40 000
Retained Earnings 85 000
The carrying amount of all assets and liabilities of Station Ltd were equal to their fair values except for:
Carrying amount Fair Value
Inventory 32 000 40 000
Equipment (cost $100 000) 70 000 75 000
Patent (cost $60 000) 30 000 34 000
Platform Ltd Balance Sheet as at 1 July 2021
| Share capital | $259 000 |
| General Reserve | $90 000 |
| Retained earnings | $141 400 |
| Cash at bank | $15 400 |
| Land | $100 000 |
| Investment in Station Ltd | $375 000 |
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Station Ltd Balance Sheet as at 1 July 2021
| Share capital | $230 000 |
| General Reserve | $85 000 |
| Retained earnings | $40 000 |
| Cash at bank | $58 000 |
| Patent | $30 000 |
| Equipment | $70 000 |
| Inventory | $32 000 |
| Land | $182 000 |
| Machinery | $90 000 |
| Loans | $107 000 |
The Company tax rate is 30%.
Required:
Complete the acquisition analysis as at the date of acquisition. (5 marks)
Prepare the adjusting journal entries for the consolidation worksheet at 1 July 2021. Narrations are required.
(19 marks)
Complete the consolidation worksheet as at 1 July 2021 on the next page. (16 marks)
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Advanced Accounting
Authors: Gail Fayerman
1st Canadian Edition
9781118774113, 1118774116, 111803791X, 978-1118037911
