As part of a corporate expansion plan, Stavanger Ltd acquired all the share capital (cum-dividend) of...

 

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As part of a corporate expansion plan, Stavanger Ltd acquired all the share capital (cum-dividend) of Askoy Ltd on 1 July 2018 for $138 000 cash. The statement of financial position of both companies at 30 June 2018 was as follows: Share capital Retained earnings Total equity Provisions Dividend payable Total liabilities Total equity and liabilities Cash Accounts receivables Land Plant Accumulated depreciation Total assets Stavanger Ltd Askoy Ltd 180 000 80 000 82 000 45 000 $262 000 $125 000 88 000 27 000 20 000 10 000 $108 000 $37 000 $370 000 $162 000 150 000 10 000 40 000 25 000 55 000 42 000 190 000 100 000 (65 000) (15 000) $370 000 $162 000 All identifiable assets and liabilities of Askoy Ltd were recorded at fair value as at 30 June 2018 except for the following: Land Plant (cost $100 000) Carrying amount Fair value $42 000 $45 000 $85 000 $90 000 The plant is expected to have a further useful life of 5 years. The dividend payable at 1 July 2018 was paid in October 2018. A dividend of $15 000 was declared on 30 June 2019 out of profits earned before 1 July 2018. The company tax rate is 30%. Required: (a) Complete the acquisition analysis and prepare the consolidation worksheet journal entries, the consolidation worksheet and the consolidated statement of financial position for Stavanger Ltd and its subsidiary Askoy Ltd as at 1 July 2018. (27 marks) (b) Prepare the consolidation worksheet journal entries for the preparation of consolidated financial statements for Stavanger Ltd and its subsidiary Askoy Ltd as at 30 June 2019. (8 marks) As part of a corporate expansion plan, Stavanger Ltd acquired all the share capital (cum-dividend) of Askoy Ltd on 1 July 2018 for $138 000 cash. The statement of financial position of both companies at 30 June 2018 was as follows: Share capital Retained earnings Total equity Provisions Dividend payable Total liabilities Total equity and liabilities Cash Accounts receivables Land Plant Accumulated depreciation Total assets Stavanger Ltd Askoy Ltd 180 000 80 000 82 000 45 000 $262 000 $125 000 88 000 27 000 20 000 10 000 $108 000 $37 000 $370 000 $162 000 150 000 10 000 40 000 25 000 55 000 42 000 190 000 100 000 (65 000) (15 000) $370 000 $162 000 All identifiable assets and liabilities of Askoy Ltd were recorded at fair value as at 30 June 2018 except for the following: Land Plant (cost $100 000) Carrying amount Fair value $42 000 $45 000 $85 000 $90 000 The plant is expected to have a further useful life of 5 years. The dividend payable at 1 July 2018 was paid in October 2018. A dividend of $15 000 was declared on 30 June 2019 out of profits earned before 1 July 2018. The company tax rate is 30%. Required: (a) Complete the acquisition analysis and prepare the consolidation worksheet journal entries, the consolidation worksheet and the consolidated statement of financial position for Stavanger Ltd and its subsidiary Askoy Ltd as at 1 July 2018. (27 marks) (b) Prepare the consolidation worksheet journal entries for the preparation of consolidated financial statements for Stavanger Ltd and its subsidiary Askoy Ltd as at 30 June 2019. (8 marks)

Answer rating: 100% (QA)

a Acquisition Analysis and Consolidation Worksheet Journal Entries as at 1 July 2018 Calculation of Goodwill Fair value of subsidiarys net assets Total identifiable assets Total identifiable liabiliti... View the full answer