Question
On 1 st January 2016, Soft Ltd acquired 70% of share capital of Hard Ltd for $8,175,000. Equity of Hard Ltd was: Share capital $7,600,000
On 1st January 2016, Soft Ltd acquired 70% of share capital of Hard Ltd for $8,175,000. Equity of Hard Ltd was:
Share capital $7,600,000
General reserve $2,100,000
Retained earnings $1,200,000
All assets of Hard Ltd were recorded at fair value on acquisition except for an item of marine equipment that had a higher fair value of $360,000 than its carrying amount. Cost of the marine equipment was $2,100,000 accumulated depreciation of $1,372,000.
- Use the worksheet below to compute Goodwill or Gain on the acquisition and the Non-controlling interest using the net method.
- Provide the necessary journal entries for Soft Ltd (parent) to eliminate Hard's share of pre-acquisition capital and reserves.
- Prepare the journal entry to recognise the Non-controlling interest.
| Elimination of investment in Hard Ltd | Hard Ltd (S) $,000 | Soft Ltd (P) $,000 | 30% NCI $,000 |
| Fair Value of consideration transferred | |||
| Less: FV of identifiable assets acquired and liabilities assumed | |||
| Share capital on acquisition date | |||
| Revaluation surplus/General Reserve -acquisition date | |||
| Retained earnings-acquisition date | |||
| Fair value adjustment | |||
| Goodwill / Gain on acquisition | |||
| NON-controlling interest |
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Accounting And Social Theory An Introduction
Authors: Lisa Jack
1st Edition
1138100714, 9781138100718
