QUESTION 1 138 MARKS The following are the statements of financial position of Westron Limited and...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/6652ddf88499c_8086652ddf87ef54.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/6652ddf8ee401_8086652ddf8defed.jpg)
Transcribed Image Text:
QUESTION 1 138 MARKS The following are the statements of financial position of Westron Limited and Montego Limited, as at the 31 December 2020. Westron Limited acquired the shares in Montego Limited on January 1, 2018 when the reserve balances were, general reserves: $7,000 and retained earnings $18 000. Westron Limited acquired 360,000 shares in Montego Limited by means of a share exchange and an immediate cash payment of $240,000. The shareholders of Montego Limited were given 2 shares in Westron Limited for every 3 shares held in Montego Limited. The market price of a share in Westron Limited at this date was $6.30 and the market price of a share in Montego Limited was $3.40. Only the immediate cash payment has been recorded in the books, Statements of Financial Position as at 31 December 2020 Montego Limited $ Westron Limited S S S Non-Current Assets Land 805,000 325,000 Furniture and Fittings at net book value 246,000 183,000 Machinery at net book value 134,000 130.000 1,185,000 638,000 Investments Subsidiary: Montego Limited 240,000 Equity investments 60,000 40,000 Current Assets Inventory 210,000 74,000 Trade Accounts receivable 130,000 80 000 Prepayments 9,000 12,000 Bank & cash 290,000 639,000 25.000 231,000 2,124,000 869, 000 EQUITY & LIABILITES $1 Ordinary shares. Reserves General reserves Retained earnings Non-Current Liabilities 9% Debentures Current Liabilities Trade Payables Taxation 960,000 400,000 70,000 205,000 27 000 40 000- 640 000 150,000 145 000 104 000 164,000 88,000 249,000 2,124 000 252,000 869,000 ADDITIONAL INFORMATION 1. At the date of the acquisition the fair market value of land owned by Montego Limited was $400, 000, no adjustments were made. 2. At December 31 2020 goodwill was impaired by $50,000. 3. At December 31,2020 Montego Limited owed Westron Limited $40,000 and Westron Limited owed Montego Limited $10,000. 4. During the year Westron Limited sold goods to Montego Limited for $63,000, after charging a mark-up of 50% At 31 December 2020 only 80% of the goods were sold. On April 1,2020 Westron Limited transferred machinery to Montego Limited at a price of $720,000 (cost to Westron Limited $610,000). Montego Limited depreciated the machinery at 20% of the cost to them on a monthly basis. 720-610 6. Non-Controlling Interest should be valued at the market price per share in Montego Limited at acquisition date. 7. Equity investments owned by Montego Limited and Westron Limited had a fair market value of $35,000 and $75,000 respectively, at the 31 December 2020. Prepare the Consolidated Statement of Financial Position for the Westron Limited Group as at 31 December 2020. (38 marks) QUESTION 1 138 MARKS The following are the statements of financial position of Westron Limited and Montego Limited, as at the 31 December 2020. Westron Limited acquired the shares in Montego Limited on January 1, 2018 when the reserve balances were, general reserves: $7,000 and retained earnings $18 000. Westron Limited acquired 360,000 shares in Montego Limited by means of a share exchange and an immediate cash payment of $240,000. The shareholders of Montego Limited were given 2 shares in Westron Limited for every 3 shares held in Montego Limited. The market price of a share in Westron Limited at this date was $6.30 and the market price of a share in Montego Limited was $3.40. Only the immediate cash payment has been recorded in the books, Statements of Financial Position as at 31 December 2020 Montego Limited $ Westron Limited S S S Non-Current Assets Land 805,000 325,000 Furniture and Fittings at net book value 246,000 183,000 Machinery at net book value 134,000 130.000 1,185,000 638,000 Investments Subsidiary: Montego Limited 240,000 Equity investments 60,000 40,000 Current Assets Inventory 210,000 74,000 Trade Accounts receivable 130,000 80 000 Prepayments 9,000 12,000 Bank & cash 290,000 639,000 25.000 231,000 2,124,000 869, 000 EQUITY & LIABILITES $1 Ordinary shares. Reserves General reserves Retained earnings Non-Current Liabilities 9% Debentures Current Liabilities Trade Payables Taxation 960,000 400,000 70,000 205,000 27 000 40 000- 640 000 150,000 145 000 104 000 164,000 88,000 249,000 2,124 000 252,000 869,000 ADDITIONAL INFORMATION 1. At the date of the acquisition the fair market value of land owned by Montego Limited was $400, 000, no adjustments were made. 2. At December 31 2020 goodwill was impaired by $50,000. 3. At December 31,2020 Montego Limited owed Westron Limited $40,000 and Westron Limited owed Montego Limited $10,000. 4. During the year Westron Limited sold goods to Montego Limited for $63,000, after charging a mark-up of 50% At 31 December 2020 only 80% of the goods were sold. On April 1,2020 Westron Limited transferred machinery to Montego Limited at a price of $720,000 (cost to Westron Limited $610,000). Montego Limited depreciated the machinery at 20% of the cost to them on a monthly basis. 720-610 6. Non-Controlling Interest should be valued at the market price per share in Montego Limited at acquisition date. 7. Equity investments owned by Montego Limited and Westron Limited had a fair market value of $35,000 and $75,000 respectively, at the 31 December 2020. Prepare the Consolidated Statement of Financial Position for the Westron Limited Group as at 31 December 2020. (38 marks)
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
How do the following organizations impact international entrepreneurship: NAFTA; WTO; and the EU?
-
1. When is it appropriate to use a t-test for independent means? 2. What is meant by the term "independent groups"? 3. Does the t-test for independent means require that certain assumptions are met?...
-
From what sources may dividends be paid legally? In what circumstances is a dividend illegal? What happens if a dividend is illegally paid? LO5
-
Normal and abnormal spoilage in units. The following data, in physical units, describe a grinding process for January: Inspection occurs at the 100% completion stage. Normal spoilage is 5% of the...
-
Transcribed image text: 3. (20 points) Thomas Company plans to order a particular part from a supplier. Demand for the part is constant during the year with an annual demand of 100000 units. The...
-
1.In order to maximize shareholder value, a corporation must earn a higher rate of return on a dollar that is retained in the corporation than the shareholders can earn by investing the dollar...
-
1. How does Python handle memory? 2. Python's ternary operators: how do they work? 3. How is Python's multithreading implemented
-
In a relational database, explain the difference between Inner join & Outer join. Provide an example query for each and describe the result set produced by each query.
-
Based on the issues with the federal government's Phoenix payroll system, which of the following was identified as the primary cause of pay problems for 80,000 employees? Question 32 Answer a. Lack...
-
What are the key factors of production? Who are the suppliers? Are we dependent on a limited number of sources? How critical are these relationships? How solid?
-
How do we measure up? How about our competitors?
-
What are the bases for competition in our industry? What are the key success factors?
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App