Complete the consolidation worksheet for 30 June 2015 8 marks Lear Regan

Complete the consolidation worksheet for 30 june 2015

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Complete the consolidation worksheet for 30 June 2015 (8 marks) Lear Regan Adjustments Group Dr Cr Cash 14 000200016 000 Inventories 16 000400020 000 Shares in Regan 50005000 0 Total Assets 35 000600036 000 Trade Payables 5 00010006000 Share capital 10 0005000500010 000 Retained profits 20 000-20 000 Total Liabilities and Equity 35 000600036 000 Show the worksheet entry to eliminate the investment asset (2 marks) Account name Debit Credit Share capital Shares in Regan 5 000 5 000
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7Question 3: Wholly Owned Subsidiaries Topic (15 marks) On 1 July 2014, Montague Ltd acquired all of the issued shares of Romeo Ltd for $500 000. At this date, the equity of Romeo Ltd is comprised of: Share capital $ 200 000Retained earnings 172 000All identifiable assets and liabilities of Romeo Ltd were recorded at fair value except for the following: Book value Fair value Plant (cost $120 000) $50 000 $90 000 The plant is expected to have a further 4 year life. The tax rate is 30%. (a) Prepare the acquisition analysis (4 marks) Consideration Share Capital Retained earnings BVINA Plant [40 000 x (1-0.3)] FVINA Goodwill 500 000 200 000 172 000 372 000 28 000 400 000 100 000 (b) Prepare the fair value entry for the plant at 1 July 2014 (3 marks) Account name Debit Credit Accumulated Depreciation Plant Plant Deferred tax liability BCVR 70 000 40 000 70 00012 00028 000
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8(c) Prepare the entry to record goodwill at 1 July 2014 (1 mark) Account name Debit Credit Goodwill BCVR 100 000 100 000(d) Prepare the pre-acquisition entry for consolidation at 1 July 2014 (3 marks) Account name Debit Credit Share capital Retained profits BCVR Investment in Romeo 200 000 172 000 128 000500 000(e) Prepare any depreciation adjustment for consolidation at 30 June 2015 (3 marks) Account name Debit Credit Depreciation expense Accumulated depreciation Deferred tax liability Income tax expense 10 000 3000 10 0003000(f) Assume Montague had acquired the shares of Romeo cum-dividend and the dividend was $20 000. How much would be the goodwill in this case? (1mark) $80 000
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9Question 4: Intragroup Transactions Topic (20 marks) Gertrude Ltd owns 100% of the ordinary shares of Hamlet Ltd. For each of the following intragroup transactions prepare the consolidation journal entry in the space provided. Assume the consolidation is being undertaken at 30 June 2015 and an income tax rate of 30% applies. (a) Hamlet Ltd pays Gertrude Ltd an annual service fee of $35 000 at the end of June each year. (2 marks) Account name Debit Credit Service revenue Service expense 35 000 35 000 (b) On 1 February 2015, Hamlet Ltd declared and paid an interim dividend of $15 000. (2 marks) Account name Debit Credit Dividend revenue Dividend paid 15 000 15 000 (c) On 1 January 2015, Gertrude provided a loan of $200 000 to Hamlet Ltd. The loan is interest-free and due to be repaid on 30 June 2020. (2 marks) Account name Debit Credit Loan payable Loan receivable 200 000 200 000
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10(d) On 20 May 2010, Gertrude Ltd transferred land to Hamlet Ltd in exchange for cash consideration of $120 000. The land had originally cost Gertrude $20 000. The land is still on hand at 30 June 2015.
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