Question Completion Status: Black Ltd acquired 25% of the shares of White Ltd on 1 July 2016 for $58,000. At acquisition date the equity of White Ltd consisted of: Share capital General reserve Retained earnings $110,000 40,000 90,000 At the date of acquisition, all the assets and liabilities of White Ltd were recorded at fair value other than the following: Carrying amount Fair value Equipment (Cost $20,000) $14,000 19,000 Inventory 5,000 8,000 The inventory was all sold by 30 June 2017. The equipment has a remaining useful life of 10 years Other information: a. The inventory of Black Ltd on 30 June 2017 included inventory purchased from White Ltd for $6,000. The original cost of the inventory was $4,000. The inventory was sold to outside parties in September 2017. b. Black Ltd sold inventory to White Ltd for $9,000 on 1 June 2018. The sale price represented a mark-up of 35% on cost. By 30 June 2018 White Ltd had sold 40% of this inventory outside the group. * Question Completion Status: c. On 1 june 2018 Black Ltd sold an item of plant to White Ltd for $11,000. The carrying amount at the time of sale was $9.000 (cost was $11,000). At the time of the sale the asset had a remaining useful life of 4 years. d. The investment account is not considered impaired. e. Relevant information for White Ltd for the year ended 30 June 2017 and 2018 are shown below: 2017 2018 35,000 10,500 30,000 9,000 21,000 90,000 (20,000) Profit before tax Income tax expense Profit after tax Retained profits - opening bal. Dividend paid Transfer to general reserve Retained profits - closing bal. General reserve Share capital Revaluation surplus 24,500 91,000 (22,000) (5,000) 88,500 45,000 110,000 45,000 91,000 40,000 110,000 Save All Answers 91,000 40,000 Retained profits - closing bal. General reserve Share capital Revaluation surplus 88,500 45,000 110,000 45,000 110,000 Required: 1) Prepare an acquisition analysis. (3 marks) 2) Prepare all necessary equity accounting entries for the year ended 30 June 2018. (12 marks) TT T Arial 3 (12pt) T. 9. Ees Save All Answer Question Completion Status: Black Ltd acquired 25% of the shares of White Ltd on 1 July 2016 for $58,000. At acquisition date the equity of White Ltd consisted of: Share capital General reserve Retained earnings $110,000 40,000 90,000 At the date of acquisition, all the assets and liabilities of White Ltd were recorded at fair value other than the following: Carrying amount Fair value Equipment (Cost $20,000) $14,000 19,000 Inventory 5,000 8,000 The inventory was all sold by 30 June 2017. The equipment has a remaining useful life of 10 years Other information: a. The inventory of Black Ltd on 30 June 2017 included inventory purchased from White Ltd for $6,000. The original cost of the inventory was $4,000. The inventory was sold to outside parties in September 2017. b. Black Ltd sold inventory to White Ltd for $9,000 on 1 June 2018. The sale price represented a mark-up of 35% on cost. By 30 June 2018 White Ltd had sold 40% of this inventory outside the group. * Question Completion Status: c. On 1 june 2018 Black Ltd sold an item of plant to White Ltd for $11,000. The carrying amount at the time of sale was $9.000 (cost was $11,000). At the time of the sale the asset had a remaining useful life of 4 years. d. The investment account is not considered impaired. e. Relevant information for White Ltd for the year ended 30 June 2017 and 2018 are shown below: 2017 2018 35,000 10,500 30,000 9,000 21,000 90,000 (20,000) Profit before tax Income tax expense Profit after tax Retained profits - opening bal. Dividend paid Transfer to general reserve Retained profits - closing bal. General reserve Share capital Revaluation surplus 24,500 91,000 (22,000) (5,000) 88,500 45,000 110,000 45,000 91,000 40,000 110,000 Save All Answers 91,000 40,000 Retained profits - closing bal. General reserve Share capital Revaluation surplus 88,500 45,000 110,000 45,000 110,000 Required: 1) Prepare an acquisition analysis. (3 marks) 2) Prepare all necessary equity accounting entries for the year ended 30 June 2018. (12 marks) TT T Arial 3 (12pt) T. 9. Ees Save All
