B407F Week 10 Tutorial question

B407F Week 10 Tutorial question - Windsor Limited for every...

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B407F Week 10 Tutorial – Merger Accounting Question 1 State the factors that would influence a management decision on whether to use the merger or the acquisition basis for the consolidation of a new subsidiary. Question 2 The statements of financial position of A Ltd. and M Ltd. are as follows: A Ltd. M Ltd $’000 $’000 Net assets 200 120 Share capital of $1 each 160 60 Profit and Loss account 40 60 200 120 A bought all of the share capital of M Ltd. for $160,000 issuing 80,000 shares at $2 each. It was agreed that the balance sheet of M Ltd. correctly states the fair value of the company’s net assets. Prepare the consolidated accounts: (a) Under acquisition accounting (b) Under merger accounting 1
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Question 3 Windsor Ltd. and Ferguson Ltd. decided to amalgamate their interest on 31 December Year 1. Shareholders in Ferguson Ltd. will receive four newly issued shares in
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Unformatted text preview: Windsor Limited for every three shares which they hold. At the date of acquisition ordinary shares in Windsor Limited were quoted on the Stock Exchange at a price of $2.50. The Statement of Financial Position on 31 December Year 1: Windsor Ltd. Ferguson Ltd. $000 $000 $000 $000 Non-current assets 1,500 700 Current assets 400 300 Less: current liabilities 200 200 180 120 1,700 820 Share capital ($1 each) 600 600 Retained earnings 1,110 220 1,700 820 The fair values of Ferguson Ltds tangible assets at 31 December Year 1 were: $000 Non-current assets 900 Current assets 400 Prepare the consolidated account after the combination using: 2 (a) the acquisition method (b) the merger method 3...
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B407F Week 10 Tutorial question - Windsor Limited for every...

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