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Acquisition Issues 2009 - ACCT 2542 WEEK 6 CLASS TEST(15...

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ACCT 2542 WEEK 6 CLASS TEST (15%) STUDENT NAME: …….……………………………………………….. STUDENT NUMBER: ……………………………… QUESTION TWO On 1 July 20X6 A Ltd acquired all the ordinary voting shares of B Ltd in exchange for cash consideration of $550,000. At the acquisition date the balance sheets of A Ltd and B Ltd and fair values of B Ltd’s assets and liabilities are as follows: A Ltd B Ltd Carrying Amount Carrying Amount Fair Value $ $ Equity Share capital 550,000 300,000 Retained profits 350,000 140,000 Liabilities Provisions 30,000 60,000 60,000 Accounts payable 27,000 34,000 34,000 Tax liabilities 10,000 6,000 6,000 Total Equity and Liabilities 967,000 540,000 Assets Cash 15,000 5,000 5,000 Inventory 42,000 75,000 95,000 Plant – at cost 620,000 480,000 360,000 Accumulated depreciation (380,000) (170,000) Land – at cost 120,000 150,000 180,000 Investment in B Ltd 550,000 - Total Assets 967,000 540,000
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