A Ltd. was incorporated with a capital of R200 000, composed of 200 000 ordinary shares...

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A Ltd. was incorporated with a capital of R200 000, composed of 200 000 ordinary shares of R1 each. A Ltd. purchased the total issued capital of B Ltd. from the existing shareholders on 1 January 1985. The capital of B Ltd. was 100 000 shares of R1 each. The balance sheet of B Ltd. at 1 January 1985 was as follows: ELTO. Liabilities Assets R Share capital Fired property authorised and issued Other assets 100 000 shares of R1 100 000 each Unappropriated 30 000 profits Creditors 94.000 224.000 224.000 The purchase price was R200 000. This was satisfied by the issue of 160 000 shares of A Ltd. priced at a premium of 25 cents per share. A Ltd. valued the fixed property of B Ltd. at R270 000 in arriving at this purchase price, but the book value was not adjusted in B's books B Ltd. continued to trade as a subsidiary of A Ltd. The profits of B Ltd. for year ended 30 June 1985 were R37 000. A dividend of R30 000 was declared out of these profits and paid in July 1985. B Ltd. sold the fixed property on 1 July 1985 for R250 000. R 200 000 2400 You are required: (a) to show by journal entries in the books of A Ltd.: the purchase of the shares in B Ltd.; ii. the receipts of dividends from A Ltd.; and any other adjustment which you consider advisable (assume that profits have been earned evenly throughout the period); and (b) to show the balance sheet of A Ltd. at 30 June 1986. A Ltd. was incorporated with a capital of R200 000, composed of 200 000 ordinary shares of R1 each. A Ltd. purchased the total issued capital of B Ltd. from the existing shareholders on 1 January 1985. The capital of B Ltd. was 100 000 shares of R1 each. The balance sheet of B Ltd. at 1 January 1985 was as follows: ELTO. Liabilities Assets R Share capital Fired property authorised and issued Other assets 100 000 shares of R1 100 000 each Unappropriated 30 000 profits Creditors 94.000 224.000 224.000 The purchase price was R200 000. This was satisfied by the issue of 160 000 shares of A Ltd. priced at a premium of 25 cents per share. A Ltd. valued the fixed property of B Ltd. at R270 000 in arriving at this purchase price, but the book value was not adjusted in B's books B Ltd. continued to trade as a subsidiary of A Ltd. The profits of B Ltd. for year ended 30 June 1985 were R37 000. A dividend of R30 000 was declared out of these profits and paid in July 1985. B Ltd. sold the fixed property on 1 July 1985 for R250 000. R 200 000 2400 You are required: (a) to show by journal entries in the books of A Ltd.: the purchase of the shares in B Ltd.; ii. the receipts of dividends from A Ltd.; and any other adjustment which you consider advisable (assume that profits have been earned evenly throughout the period); and (b) to show the balance sheet of A Ltd. at 30 June 1986.

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Share value of b ltd on 1 st jan 1985 fairmarket value offixed property 270000 current ass... View the full answer