On 8 December 2020, Travis Ltd acquired the remaining continuing operations of Scott Ltd. Scott Ltd...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On 8 December 2020, Travis Ltd acquired the remaining continuing operations of Scott Ltd. Scott Ltd will liquidate soon after the business combination is completed. The Statement of Financial Position of Scott Ltd as at 8 December 2020: Carrying amount Fair values Assets Land and buildings Land held for development Biological assets Accumulated depreciation - biological assets Patents Cash and cash equivalents Trade and other receivables Total assets Equity Ordinary shares at $3.5 each, called to $2.8 Less) calls in arrears Accumulated losses Total equity Liabilities Trade and other payables Mortgage (secured) Total liabilities Total equity and liabilities $ 920 000 500 000 780 000 (338 000) 600 000 125 000 Calls in arrears were fully collected. Vendors provided further discounts of $50,000. 675 000 $3 262 000 1 199 996 (128 571) (209 425) 862 000 (b) 1 800 000 600 000 2.400 000 $3 262 000 For this business combination, Travis Ltd agreed to acquire all of the assets (except for cash) and secured debts of Scott Ltd. Travis Ltd also incurred due diligence and legal fee of $12,500 plus GST in undertaking this acquisition. Scott Ltd also had a customer list with a value of $118,900 that had yet to be recorded. (c) $1,200,000 600,000 380,000 570,000 598,000 In exchange, Travis Ltd agreed that: 1. The shareholders of Scott Ltd would receive 1 ordinary share in Travis Ltd for every 5 ordinary shares held in Scott Ltd. The fair value of these new shares was agreed to be $18.80 each. Costs to issue and registering the shares to the ordinary shareholders of Scott Ltd were $21,428. 600,000 2. To provide sufficient cash, to that already held by Scott Ltd, to enable Scott Ltd to pay off all its liabilities including unrecorded directors' fees of $18,000, sales commission of $5,000 and liquidation expenses of $19,500. Additional information relevant for the liquidation process of Scott Ltd: • The mortgage was secured against the land and buildings. The mortgage holder took possession of the land and buildings and they engaged a receiver to sell it for them for $1,208,000 and after settlement of the debt, any excess funds were paid to the liquidator. Question 5 (contd.) Required: Show all workings. Narrations are not required. (a) Prepare the acquisition analysis of Scott Ltd as at 8 December 2020. Prepare the general journal entries in the records of Travis Ltd at 8 December 2020 to record this business combination as per AASB 3/IFRS 3, based on the information above. Prepare the Liquidation account, the Liquidator's Cash account and the Shareholders' Distribution account (in T-format) for Scott Ltd as at 8 December 2020. On 8 December 2020, Travis Ltd acquired the remaining continuing operations of Scott Ltd. Scott Ltd will liquidate soon after the business combination is completed. The Statement of Financial Position of Scott Ltd as at 8 December 2020: Carrying amount Fair values Assets Land and buildings Land held for development Biological assets Accumulated depreciation - biological assets Patents Cash and cash equivalents Trade and other receivables Total assets Equity Ordinary shares at $3.5 each, called to $2.8 Less) calls in arrears Accumulated losses Total equity Liabilities Trade and other payables Mortgage (secured) Total liabilities Total equity and liabilities $ 920 000 500 000 780 000 (338 000) 600 000 125 000 Calls in arrears were fully collected. Vendors provided further discounts of $50,000. 675 000 $3 262 000 1 199 996 (128 571) (209 425) 862 000 (b) 1 800 000 600 000 2.400 000 $3 262 000 For this business combination, Travis Ltd agreed to acquire all of the assets (except for cash) and secured debts of Scott Ltd. Travis Ltd also incurred due diligence and legal fee of $12,500 plus GST in undertaking this acquisition. Scott Ltd also had a customer list with a value of $118,900 that had yet to be recorded. (c) $1,200,000 600,000 380,000 570,000 598,000 In exchange, Travis Ltd agreed that: 1. The shareholders of Scott Ltd would receive 1 ordinary share in Travis Ltd for every 5 ordinary shares held in Scott Ltd. The fair value of these new shares was agreed to be $18.80 each. Costs to issue and registering the shares to the ordinary shareholders of Scott Ltd were $21,428. 600,000 2. To provide sufficient cash, to that already held by Scott Ltd, to enable Scott Ltd to pay off all its liabilities including unrecorded directors' fees of $18,000, sales commission of $5,000 and liquidation expenses of $19,500. Additional information relevant for the liquidation process of Scott Ltd: • The mortgage was secured against the land and buildings. The mortgage holder took possession of the land and buildings and they engaged a receiver to sell it for them for $1,208,000 and after settlement of the debt, any excess funds were paid to the liquidator. Question 5 (contd.) Required: Show all workings. Narrations are not required. (a) Prepare the acquisition analysis of Scott Ltd as at 8 December 2020. Prepare the general journal entries in the records of Travis Ltd at 8 December 2020 to record this business combination as per AASB 3/IFRS 3, based on the information above. Prepare the Liquidation account, the Liquidator's Cash account and the Shareholders' Distribution account (in T-format) for Scott Ltd as at 8 December 2020.
Expert Answer:
Answer rating: 100% (QA)
1 Sales revenue A Costs Direct materials Particulars Less Selling and administrative NOL 2 400800 16... View the full answer
Related Book For
Accounting Principles
ISBN: 978-1119411482
13th edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Posted Date:
Students also viewed these accounting questions
-
The comparative statement of financial position of Dropafix Inc. as at June 30, 2017, and a statement of comprehensive income for the 2017 fiscal year follow: Additional information: 1. Dropafix...
-
The comparative statement of financial position of Sensify Corporation as at December 31, 2017, follows: Net income of $37,000 was reported and dividends of $13,000 were declared and paid in 2017....
-
The comparative statement of financial position of Dropafix Inc. as at June 30, 2020, and a statement of comprehensive income for the 2020 fiscal year follow: ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?...
-
What is the significance of communication between managers and their subordinates, and how does it impact employee performance?
-
In 2015, Julie, a single individual, reported the following items of income and deduction: Salary.. $166,000 Interest income .. 14,000 Long-term capital gain from sales of stock .. 22,000 Short-term...
-
What are the areas of importance in water quality?
-
What is the difference between management accounting and the other two types of conventional accountingfinancial accounting and other accounting systems?
-
Given the following balance sheet, income statement, historical ratios and industry averages, calculate the Pulp, Paper, and Paperboard, Inc. financial ratios for the most recent year. Analyze its...
-
Which of the individuals made the best use of their credit card? Which made it worse? Why? What should you look for when choosing a credit card? What is a "grace period"? How can it help you manage a...
-
Ashley Rhymer established Fair Play Financial Services on January 1, 2010. Fair Play Financial Services offers financial planning advice to its clients. The effect of each transaction and the...
-
A quadratic spline is operationally simpler than the cubic spline. Interpolation is carried out by piecewise quadratics. (a) What are the suitable joint conditions for a quadratic spline? (b) Show...
-
In 2018, Paula Pierce receives gift property with a fair market value of \(\$ 95,000\) (adjusted basis to the donor of \(\$ 35,000\) ). Assume the donor purchased the property in 2008 and paid gift...
-
Construct Kaisers Ice Cream Parlors demand for labor curve. Explain how many workers per day Kaisers hires. Kaisers Ice Cream Parlor hires workers to produce milkshakes. The table shows the workers...
-
Gordon Gladstone owns 120 shares of Jones Corp. common stock which he purchased on June 10,2017 , for \(\$ 1,800\). One year later, he received a 25 percent nontaxable common stock dividend. On...
-
How socially responsible is the company in which you work? What particular things does it do to enhance the community, the lives of its employees, and/or the environment? What else might it do to be...
-
Staton Inc. has four unrelated shareholders, Wayne, Judy, Erica, and Josh. Their respective bases in the shares are \(\$ 15,000\), \(\$ 17,000, \$ 19,000\), and \(\$ 21,000\). Each shareholder owns...
-
A dog is playing in a swamp as shown in the diagram. She runs at 6 m/s in the swamp (anywhere except the road) and 6.5 m/s on the road. She got hungry and decided to return home imminently. What is...
-
If the jobs displayed in Table 18.24 are processed using the earliestdue-date rule, what would be the lateness of job C? TABLE 18.24 Processing Times and Due Dates for Five Jobs Job C D E...
-
Journalize the following transactions for Combs Company. (a) Purchased 6,000 units of raw materials on account for $11,500. The standard cost was $12,000. (b) Issued 5,600 units of raw materials for...
-
Using the information in P26.1, compute the overhead controllable variance and the overhead volume variance. Data from P26.1: Tjandra Company manufactures a single product. The standard cost per unit...
-
The following information is available for Tomlin Company. Prepare the cost of goods manufactured schedule for the month of April. Raw materials inventory Work in process inventory Apil April 30...
-
A _______________ interval estimates the mean y-value for all individuals with a given x-value. In Exercises 3 and 4, fill in each blank with the appropriate word or phrase.
-
For a sample of size n = 20, the following values were obtained: b0 = 1.05, b1 = 4.50, se = 0.54, (x x )2 = 10.9, x = 8.52. Construct a 95% confidence interval for the mean response when x = 10.
-
In Exercises 9 and 10, use the given set of points to a. Compute b0 and b1. b. Compute the predicted value y for the given value of x. c. Compute the residual standard deviation se. d. Compute the...
Study smarter with the SolutionInn App