Question 1

On 01 July 2021 Wanda Ltd acquired 100% of the issued voting shares of Vision Ltd for consideration of $375,000. At the date of acquisition Vision Ltd equity balances were as follows: Issued capital $200,000, and Retained earnings $50,000. All of Vision Ltd's identifiable asset and assumed liabilities were at fair value except an item of plant whose fair value was $10,000 greater than its carrying value. The remaining useful life of the plant was 5 years. The company tax rate is 30%. How much goodwill will be recognised on consolidation?

a. 118000

b. 132000

c. 115000

d. 145000

Question 2:

B Company Ltd, a reporting entity, purchases all the issued shares of C Company Pty Ltd for $600,000. The net assets of C Company Pty Ltd at the date of acquisition consist of equipment $800,000 and a loan of $200,000 with these values representing their respective fair values.

B Company Ltd will record the acquisition in its separate accounting records as follows:

a. Dr. Investment in C Company Pty Ltd $600,000

Cr. Cash $600,000

b. Dr. Equipment $800,000

Cr. Loan $200,000 Cr. Issued Capital $600,000

c. Dr. Investment in B Company Pty Ltd $600,000

Cr. Cash $600,000

d. Dr. Equipment $800,000

Cr. Loan $200,000

Cr. Cash $600,000

e. Dr. Investment in C Company Pty Ltd $600,000

Cr. Issued Capital $600,000