On 1 January 2017 Picaso Ltd acquired 51% of Sindbad Ltd by $150000 cash and gained...

 

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On 1 January 2017 Picaso Ltd acquired 51% of Sindbad Ltd by $150000 cash and gained control. On the day of acquisition S had Share capital of $500,000 and Retained earnings of $15000 in as its equity. During the year P sold S Ltd goods for $18000 which includes a mark-up of 50%. Half of these goods were still in stock of S at the end of the year. Also, P sold a truck to P Ltd $5000 which had a book value of $4000. The financial statements of the two companies are as follows. Prepare the group's Income Statement and Balance Sheet. P Sales Less: Cost of Goods Sold Gross profit Operating Expenses: Selling Expenses General and Admin Exp Net Operating Profit Gain on sale of Truck Net Profit Balance sheet as on 31 Dec 2017 Asset Investment in S Accounts Receivables Inventory Land Machine Accumulated Depreciation Machine Total Asset Liability Bond Accounts Payable Equity Share Capital retained earnings Liability and equity $400,000 100,000 300,000 50000 60000 190,000 1000 $189000 P $150,000 52,000 40,000 800,000 450,000 (20,000) 1,322,000 17,000 105,000 800,000 400000 1,322,000 $200,000 90,000 110,000 S 30000 20,000 60,000 $60000 32000 80000 680,000 165000 (12,000) 945000 308000 37000 500000 100000 945000 On 1 January 2017 Picaso Ltd acquired 51% of Sindbad Ltd by $150000 cash and gained control. On the day of acquisition S had Share capital of $500,000 and Retained earnings of $15000 in as its equity. During the year P sold S Ltd goods for $18000 which includes a mark-up of 50%. Half of these goods were still in stock of S at the end of the year. Also, P sold a truck to P Ltd $5000 which had a book value of $4000. The financial statements of the two companies are as follows. Prepare the group's Income Statement and Balance Sheet. P Sales Less: Cost of Goods Sold Gross profit Operating Expenses: Selling Expenses General and Admin Exp Net Operating Profit Gain on sale of Truck Net Profit Balance sheet as on 31 Dec 2017 Asset Investment in S Accounts Receivables Inventory Land Machine Accumulated Depreciation Machine Total Asset Liability Bond Accounts Payable Equity Share Capital retained earnings Liability and equity $400,000 100,000 300,000 50000 60000 190,000 1000 $189000 P $150,000 52,000 40,000 800,000 450,000 (20,000) 1,322,000 17,000 105,000 800,000 400000 1,322,000 $200,000 90,000 110,000 S 30000 20,000 60,000 $60000 32000 80000 680,000 165000 (12,000) 945000 308000 37000 500000 100000 945000

Answer rating: 100% (QA)

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