Question

The account balances of Islewood Ltd. and Richmond Ltd. at January 1, 2013, were as follows:
The fair values of Richmond’s assets at January 1, 2013, were:
Land ............. 240,000
Machinery............. 220,000
Inventory............. 95,000
The two companies decided to combine on January 1, 2013, with Islewood issuing one share (fair value $2) and $0.50 cash for each share in Richmond. Richmond’s shares were acquired cum div. The tax rate is 30%.
Required
(a) Prepare the consolidated statement of financial position immediately after Islewood’s acquisition of shares in Richmond.
(b) Prepare the consolidation process adjustments required for the consolidation at December 31, 2014, assuming both dividends were paid during September 2013. Assume all inventory on hand at January 1, 2013, was sold in the following three months, and that the machinery has a further four-year life.


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  • CreatedJune 09, 2015
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