On January 1, 2013, Serpens Ltd. acquired the issued shares (cum div.) of Vela Ltd. for $120,000.
Question:
On January 1, 2013, Serpens Ltd. acquired the issued shares (cum div.) of Vela Ltd. for $120,000. At that date, the financial statements of Vela included the following items:
Share capital ..........$52,500
Retained earnings .......... 54,000
Dividend payable.......... 7,500
At January 1, 2013, Vela had recorded goodwill of $2,000, and all its identifiable assets and liabilities were recorded at fair value. Share capital represents 75,000 shares. The dividend was paid on June 30, 2013. The tax rate is 30%.
Required
Prepare the pre-acquisition adjustments for the preparation of consolidated financial statements at:
(a) January 2013, immediately after combination.
(b) December 31, 2013.
GoodwillGoodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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