On 1 July 2009, Pearl Ltd acquired 60% of the shares (cum div.) of Sensor Ltd...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On 1 July 2009, Pearl Ltd acquired 60% of the shares (cum div.) of Sensor Ltd for $36,480 when the equity of Sensor Ltd consisted of: Share capital General reserve Retained earnings $32,000 1,600 1,600 At acquisition date, the liabilitiesIof Sensor Ltd included a dividend payable of $800, NCI was measured as the NCI's proportionate share in the recognised amounts of the Sensor's net identifiable assets as at the acquisition date. All the identifiable assets and liabilities of Sensor Ltd were recorded at fair value except for equipment and inventory. The equipment had a carrying amount of $144,000 (net of $56,000 accumulated depreciation) and a fair value of $160,000. The Equipment have a further 5-ycar life and are depreciated on a straight-line basis. For the inventory, the book and fair value are $32,000 and $40,000 respectively at the date of the acquisition. All these inventory on hand at 1 July 2009 was sold by 30 June 2010. The dividend payable at acquisition date was paid in August 2009. Goodwill has not been impaired. The tax rate is 30%. Both Pearl Ltd and Sensor Ltd use 30 June as the annual financial reporting date. In the 3 years after the acquisition date, Sensor Ltd recorded the changes in equity shown in the following table: 2009-10 6400 Profit for the period Retained earnings (opening balance) 2010-11 9600 2011-12 12000 1600 8,000 800 6240 13600 25600 1200 1600 2800 Dividend paid Dividend declared 15840 960 960 1280 1760 2240 Retained earnings (closing balance) Share capital 6240 32000 1600 1600 13600 32000 1600 2000 22800 32000 1600 1920 General reserve Assets revaluation reserve The following transactions took place between Pearl Ltd and Sensor Ltd: 1. Sensor Ltd manufactures items of machinery which are used as property, plant and equipment by other companies, including Pearl Ltd. On 1 October 2010, Sensor Ltd sold such an item to Pearl Ltd for $21,000, its cost to Sensor Ltd being only $17,000 to manufacture. Pearl Ltd charges depreciation on these machines at 10% p.a. on the diminishing value. 2. Sensor Ltd also sells second-hand machinery. Pearl Ltd sold one of its depreciable assets (original cost $40,000, accumulated depreciation $36,000) to Sensor Ltd for $3000 on 1 January 2012. Sensor Ltd had not resold the item by 30 June 2012. 3. On 1 April 2011, Sensor Ltd sold inventory to Pearl Ltd and recorded a profit of $3,400. Half of these inventory has been sold on 1 April 2012 to an external party by Pearl Ltd. REQUIRED: Prepare the consolidation adjustment entries for Pearl Ltd at 30 June 2012 in the answer sheet. You can round the value to the nearest whole number. On 1 July 2009, Pearl Ltd acquired 60% of the shares (cum div.) of Sensor Ltd for $36,480 when the equity of Sensor Ltd consisted of: Share capital General reserve Retained earnings $32,000 1,600 1,600 At acquisition date, the liabilitiesIof Sensor Ltd included a dividend payable of $800, NCI was measured as the NCI's proportionate share in the recognised amounts of the Sensor's net identifiable assets as at the acquisition date. All the identifiable assets and liabilities of Sensor Ltd were recorded at fair value except for equipment and inventory. The equipment had a carrying amount of $144,000 (net of $56,000 accumulated depreciation) and a fair value of $160,000. The Equipment have a further 5-ycar life and are depreciated on a straight-line basis. For the inventory, the book and fair value are $32,000 and $40,000 respectively at the date of the acquisition. All these inventory on hand at 1 July 2009 was sold by 30 June 2010. The dividend payable at acquisition date was paid in August 2009. Goodwill has not been impaired. The tax rate is 30%. Both Pearl Ltd and Sensor Ltd use 30 June as the annual financial reporting date. In the 3 years after the acquisition date, Sensor Ltd recorded the changes in equity shown in the following table: 2009-10 6400 Profit for the period Retained earnings (opening balance) 2010-11 9600 2011-12 12000 1600 8,000 800 6240 13600 25600 1200 1600 2800 Dividend paid Dividend declared 15840 960 960 1280 1760 2240 Retained earnings (closing balance) Share capital 6240 32000 1600 1600 13600 32000 1600 2000 22800 32000 1600 1920 General reserve Assets revaluation reserve The following transactions took place between Pearl Ltd and Sensor Ltd: 1. Sensor Ltd manufactures items of machinery which are used as property, plant and equipment by other companies, including Pearl Ltd. On 1 October 2010, Sensor Ltd sold such an item to Pearl Ltd for $21,000, its cost to Sensor Ltd being only $17,000 to manufacture. Pearl Ltd charges depreciation on these machines at 10% p.a. on the diminishing value. 2. Sensor Ltd also sells second-hand machinery. Pearl Ltd sold one of its depreciable assets (original cost $40,000, accumulated depreciation $36,000) to Sensor Ltd for $3000 on 1 January 2012. Sensor Ltd had not resold the item by 30 June 2012. 3. On 1 April 2011, Sensor Ltd sold inventory to Pearl Ltd and recorded a profit of $3,400. Half of these inventory has been sold on 1 April 2012 to an external party by Pearl Ltd. REQUIRED: Prepare the consolidation adjustment entries for Pearl Ltd at 30 June 2012 in the answer sheet. You can round the value to the nearest whole number.
Expert Answer:
Answer rating: 100% (QA)
th As at 30 June 2012 Concolidation Actuctment Enkies for Pearlid ... View the full answer
Related Book For
Financial Accounting and Reporting
ISBN: 978-0273744443
14th Edition
Authors: Barry Elliott, Jamie Elliott
Posted Date:
Students also viewed these accounting questions
-
On 1 July 2015, Yellow Ltd acquired all of the assets and liabilities of Black Ltd. In exchange for these assets and liabilities, Yellow Ltd issued 100,000 shares that at date of issue had a fair...
-
In 2008, 3 years after it began operations, the Pearce Corporation decided to change from the direct write-off method of recording bad debts to estimating bad debts. The following information is...
-
On 1 July 2015, Candy Ltd acquired all of the issued shares of Sweet Ltd. As part of the settlement, Candy Ltd agreed to pay $3,500,000 on 1 July 2015 and $1,650,000 payable on 1 July 2016. The...
-
Which of these is located farthest south? Crete O Sardinia Sicily Corsica
-
What is the difference between output price risk and input price risk?
-
Suppose that exhibit 12.4 is your practices marketing forecast. Discussion Questions By law, you must charge everyone the same price. What do you charge? Your costs equal $100,000 plus $20 per...
-
Explain the two major types of measure used in conventional accounting and ecological accounting. When consideration is given to environmental issues in accounting, what are the two main groups of...
-
Cost and production data for Binghamton Beverages Inc. are presented as follows: Required: 1. a. Calculate net variances for materials, labor, and factory overhead. b. Calculate specific materials...
-
O. Scheduling for the Short Term Claire Consultants has been entrusted with the task of evaluating a business plan that has been divided into four sections - marketing, finance, operations and human...
-
If you put 9 electrons in a hyrdogen atom, what are the quantum numbers of the highest electron? (what is the principle that says you cant have 2 electrons with the same quantum numbers?)
-
Outline and discuss briefly eight factors that help to define an organizations strategy for selecting auditees to be included in the budget period.
-
Identify the four steps in selecting auditees for a budget period.
-
How is risk used to decide upon an audit requested by an auditee? What potential benefits do you think might accrue by conducting such audits?
-
Claim: \(\mu_{1} \geq \mu_{2} ; \alpha=0.01\). Assume \(\sigma_{1}^{2}=\sigma_{2}^{2}\) Sample statistics: \(\bar{x}_{1}=44.5, s_{1}=5.85, n_{1}=17\) and \[ \bar{x}_{2}=49.1, s_{2}=5.25, n_{2}=18 \]...
-
How is it possible to use risk as the predominant consideration when deciding upon an audit that has been requested by management? What other factors may play a role?
-
SESSION DATE JUNE 21, 2024 15 To: Binh's Bins 672 Alleyway Drive Red Deer, AB T4R 2T4 BINH'S BINS - GENERAL JOURNAL Sylvan Motors 179 Towing Blvd., Red Deer, AB T4P 1S2 Date: June 15, 2024 Truck...
-
Write a program to move a signed number from smaller register to bigger register. Hint: movzx ax, bl Topic: Data Related Operators and Directives in assembly language
-
Phoenix plc trial balance at 30 June 20X7 was as follows: The following information is available: 1. Freehold premises acquired for £1.8 million were revalued in 20X4, recognizing a gain of...
-
The historical cost accounts of Smith plc are as follows: Statement of financial position of Smith plc as at 31 December 20X8 Notes 1 Land and buildings were acquired in 20X0 with the buildings...
-
(a) Measurement in financial statements, Chapter 6 of the ASBs Statement of Principles, was published in 1999. Amongst the theoretical valuation systems considered is value in use more commonly...
-
A hydrocarbon \(\mathrm{H}_{2}\left(\mathrm{CH}_{2} ight)_{n}\) is dissolved in a solvent \(S\) which freezes at \(9.0^{\circ} \mathrm{C}\). A solution which contains \(0.90 \mathrm{~g}\) of...
-
Estimate the depression in the freezing point if \(58.5 \mathrm{~g}\) of \(\mathrm{NaCl}\) is added to \(1 \mathrm{~L}\) of water at atmospheric pressure.
-
Calculate the mass of methyl alcohol which, when dissolved in \(100 \mathrm{~g}\) of water, would just prevent the formation of ice at \(-10^{\circ} \mathrm{C}\), given that \(K_{\mathrm{f}}\) is...
Study smarter with the SolutionInn App