Prepare the statements of financial position of Mother Ltd and the consolidated statement of financial position as at 1 January 2020 after each transaction, using for each question the statements of financial position of Mother Ltd and Son Ltd as at 1 January 2020 which were as follows:

Items	Mother Ltd ($)	Son Ltd ($)
Cash	30,000	10,000
Other net assets	25,000	2,800
Total assets	55,000	12,800
Ordinary shares of $1 each	45,500	3,000
Retained earnings	9,500	9,800
Total equity	55,000	12,800

On 1 January 2020 Mother Ltd acquired all the ordinary share in Son Ltd for $15,000 cash. The fair value of the net assets in Son Ltd was their book value.

Assume the purchase in case a was satisfied by the issue of 5,000 new ordinary shares in Mother Ltd. The fair value of a $1 ordinary share in Mother Ltd was $3. The fair value of the net assets in Son Ltd was their book value.

On 1 January 2020, Mother acquired 70% of the ordinary shares in Son Ltd for 10,000 cash. The fair value of the net asset in Son Ltd was their book value. Assume in this case that the non-controlling interest is measured using method 1. 

Answer rating: 100% (QA)

a Fair value of net assets of Son Ltd book value 12800 since there are no liabilities Purchase price 15000 Goodwill purchase priec Fair value of net a... View the full answer