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.
Required:
- Use the worksheet below to compute Goodwill or Gain on acquisition and the Non-controlling interest using net method. (3 marks)
- Provide the necessary journal entries for Soft Ltd (parent) to eliminate Hards share of pre-acquisition capital and reserves. (2 marks)
- Prepare the journal entry to recognise the Non-controlling interest. (2 marks)
| 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 |
|
|
|
| Revalue surplus-acquisition date |
|
|
|
| Retained earnings-acquisition date |
|
|
|
| Fair value adjustment |
|
|
|
| Goodwill / Gain on acquisition |
|
|
|
| NON-controlling interest |
|
|
|
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
Intermediate Accounting
Authors: James D. Stice, Earl K. Stice, Fred Skousen
16th Edition
324376375, 0324375743I, 978-0324376371, 9780324375749, 978-0324312140
