B407F Week 6 Tutorial question

B407F Week 6 Tutorial question - B407F Week 6 Tutorial...

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1 B407F Week 6 Tutorial -Consolidated Statement of Income (II) Question 1 Hamburg Ltd acquired 80% shareholdings in Scott Ltd on 1 January 2009 when the retained earnings of Scott Ltd were $13,150,000. The summarized statement of financial position and income statement of the two companies are as follows: Statement of Financial Position as at 31 December 2009 Hamburg Scott Ltd Ltd $000 $000 Property, plant and equipment 45,200 35,500 Investments in Scott Ltd 34,600 - Inventory 5,830 6,030 Accounts receivable 4,596 4,141 Cash and bank 3,446 345 Total assets 93,672 46,016 Ordinary share capital ($1 each) 60,000 24,000 Retained earnings 26,372 15,076 Accounts payable 6,000 6,340 Tax payable 1,300 600 Total equity and liabilities 93,672 46,016 Income Statement for the year ended 31 December 2009 Revenue 24,878 20,111 Cost of sales (5,700) (6,570) Gross profit 19,178 13,541 Dividend income 2,400 - Gain on disposal of asset - 50 Finance costs (4,200) (3,832) Administrative expenses (9,690) (4,233) Profit before taxation 7,688 5,526 Taxation (1,300) (600) Profit after taxation 6,388 4,926 Dividend paid (1,600) (3,000) 4,788 1,926
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2 Additional information: (a) One of the equipments of Scott Ltd was acquired on 1 January 1999 with an original cost of $1,000,000 and a useful life of 20 years. On 1 January 2009, Scott Ltd sold this equipment to Hamburg Ltd at the price of $550,000 and the remaining useful life is 10 years. Both companies adopt the straight line depreciation method for the equipments. (b) During the year, Scott Ltd sold goods to Hamburg Ltd at the selling price of $1,800,000 (with a mark-up of 20%). At the end of 31 December 2009, 40% of these goods were in the warehouse of Hamburg Ltd. (c) An assessment of the carrying amount of the goodwill had been carried out and an impairment of $450,000 should be provided. (d)
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B407F Week 6 Tutorial question - B407F Week 6 Tutorial...

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