Question
Required: Prepare the statements of financial position of Parent Ltd and the consolidated statement of financial position as at 1 January 20X7 after each transaction,
Required:
Prepare the statements of financial position of Parent Ltd and the consolidated statement of financial position as at 1 January 20X7 after each transaction, using for each question the statements of financial position of Parent Ltd and Daughter Ltd as at 1 January 20X7 which were as follows:
Parent Ltd
Daughter Ltd
Ordinary shares of 1 each
40,500
9,000
Retained earnings
4,500
1,800
45,000
10,800
Cash
20,000
2,000
Other net assets
25,000
8,800
45,000
10,800
Question 1
Assume that on 1 January 20X7 Parent Ltd acquired all the ordinary shares in Daughter Ltd for 10,800 cash. The fair value of the net assets in Daughter Ltd was their book value. The purchase consideration was satisfied by the issue of 5,400 new ordinary shares in Parent Ltd. The fair value of a 1 ordinary share in Parent Ltd was 2. The fair value of the net assets in Daughter Ltd was their book value.
Question 2
On 1 January 20X7 Parent Ltd acquired all the ordinary shares in Daughter Ltd for 16,200 cash. The fair value of the net assets in Daughter Ltd was their book value.
The purchase consideration was satisfied by the issue of 5,400 new ordinary shares in Parent Ltd. The fair value of a 1 ordinary share in Parent Ltd was 3. The fair value of the net assets in Daughter Ltd was their book value.
Question 3
On 1 January 20X7 Parent Ltd acquired all the ordinary shares in Daughter Ltd for 16,200 cash. The fair value of the net assets in Daughter Ltd was 12,000.
The purchase consideration was satisfied by the issue of 5,400 new ordinary shares in Parent Ltd. The fair value of a 1 ordinary share in Parent Ltd was 3. The fair value of the net assets in Daughter Ltd was 12,000.
Question 4
On 1 January 20X7 Parent Ltd acquired all the ordinary shares in Daughter Ltd for 6,000 cash. The fair value of the net assets in Daughter Ltd was their book value.
Question 5
On 1 January 20X7 Parent Ltd acquired 75% of the ordinary shares in Daughter Ltd for 9,000 cash. The fair value of the net assets in Daughter Ltd was their book value. Assume in each case that the non-controlling interest is measured using method 1.
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