On 1 January 2020, P Ltd acquired 90% of ownership of S Ltd. Fair value of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On 1 January 2020, P Ltd acquired 90% of ownership of S Ltd. Fair value of non-controlling interests at the date of acquisition was $600,000. The financial statements of P Lid and S Ltd for the year ended 31 December 2021 are shown below. Statement of Profit and Loss and Partial Statement of Changes in Equity for the year ended 31 December 2021 Sales Cost of sales Gross profit Operating expenses Operating profit Dividend income Profit before tax Tax expense Profit after tas Dividends declared Profit retained Retained earnings, 1 January 2021 Retained earnings, 31 December 2021 Fixed assets (net book value) Investment in S Ltd (at cost). Other investments Inventory Accounts receivable. Cash Accounts payable Share capital Retained earnings Statement of Financial Position as at 31 December 2021 PLtd S000 9,000 5.400 1,600 Fixed assets Unrecognized intangible assets Additional information Book value S 000 1,200 Transfer price invoiced by P Ltd to S Lid Original cost of inventory Profit on the sale = 1,200 55,000 (40.000) 15,000 Transfer price invoiced by S Ltd to P Ltd Original cost of inventory Profit on the sale PLtd $ 000 (5.000) 10,000 400 10,400 (2.000) 8,400 (1.400) 7,000 9.000 16,000 $ 000 200 (160) 40 3,400 2,000 500 21.900 a) Consolidated cost of sales; b) Consolidated inventory balance: c) Consolidated carrying amount of fixed assets d) Consolidated retained earnings 1)S Ltd purchased inventory from P Ltd on 1 November 2620. Details are as follows: 4) Assume a tax rate of 20% 2.300 3,600 16,000 21.900 Share capital and retained earnings of S Lid were $3,000,000 and 1,000,000respectively at the date of acquisition. Fair and book values of net assets of S Ltd at the date of acquisition are shown as follows: 2)S Ltd sold inventory to P Lad during 2021. Details are as follows: $ 000 1,000 (800) 200 ||||||||▬▬▬▬▬ Fair value $ 000 1,800 600 2.400 600 (300) The remaining useful life of fixed assets of S Lad as at the date of acquisition is four years with no residual value at the end of the useful life, while the unrecognized intangible asset at the acquisition date had an indefinite useful life and showed no indications of impairment. $ 000 S Ltd $ 000 7,500 (4.000) 3.500 (500) 3.000 3,000 (600) 2,400 (400) 2,000 5.000 7,000 S Ltd $000 7,000 40% of the inventory was resold to third parties in 2021 with 60% remaining in S Ltd's inventory as at 31 December 2021. - 2,000 1,600 800 11,400 75% of the inventory was resold to the third party in 2021, and 25% of the inventory was unsold and remained in P Lid's inventory as at 31 December 2021. $ 000 360 1,400 3.000 7.000 11.400 2) Prepare the consolidation worksheets for P Ltd and S Ltd for the year ended 31 December 2021. (30 marks) 3) Determine the following amounts for 2021 analytically and compare with the amounts in your consolidation worksheets in part (2). (20 marks) 3) SLtd transferred its fixed asset to P Ltd on 10 January 2020. Details are as follows: Transfer price invoiced by S Ltd to P Lid Original cost of the fixed asset Accumulated depreciation Net book value at 10 January 2020 Profit on sale recorded by S Ltd in 2020 Original useful life at the date of purchase Remaining useful life after the transfer P had recognized a full year's depreciation on the transferred fixed asset in 2020. 300 60 6 years 3 years Required 1) Prepare the following consolidation adjustments and elimination entries for the year ended 31 December 2021. (50 marks) CJEI: Elimination of investment in S Ltd balance CJE2: Adjustment for past and current year's depreciation of undervalued fixed assets of S Ltd CJE3: Tax effect of CJE2 CJE4: Adjustment for the unrealized profit arising from downstream sale of inventory in 2020 CJES: Tax effect of CJE4 CJE6 Adjustment for the unrealized profit arising from upstream sale of inventory during 2021 CJE7: Tax effect of CJE6 CJES: Adjustment for the unrealized profit arising from transfer of fixed asset in prior year CJE9 Tax effect of CJES CJE10 Adjustment for past and current year's depreciation of the transferred fixed asset CJEII: Tax effect of CJE10 CJE12: Allocate share of post-acquisition retained earnings of S Ltd to NCI CJE13: Eliminate dividends declared by S Lid CJE14 Allocate share of current year's profit of S Ltd to NCI 2) Prepare the consolidation worksheets for P Ltd and S Ltd for the year ended 31 December 2021. (30 marks) 3) Determine the following amounts for 2021 analytically and compare with the amounts in your consolidation worksheets in part (2). (20 marks) a) Consolidated cost of sales b) Consolidated inventory balance c) Consolidated carrying amount of fixed assets Consolidated retained earnings On 1 January 2020, P Ltd acquired 90% of ownership of S Ltd. Fair value of non-controlling interests at the date of acquisition was $600,000. The financial statements of P Lid and S Ltd for the year ended 31 December 2021 are shown below. Statement of Profit and Loss and Partial Statement of Changes in Equity for the year ended 31 December 2021 Sales Cost of sales Gross profit Operating expenses Operating profit Dividend income Profit before tax Tax expense Profit after tas Dividends declared Profit retained Retained earnings, 1 January 2021 Retained earnings, 31 December 2021 Fixed assets (net book value) Investment in S Ltd (at cost). Other investments Inventory Accounts receivable. Cash Accounts payable Share capital Retained earnings Statement of Financial Position as at 31 December 2021 PLtd S000 9,000 5.400 1,600 Fixed assets Unrecognized intangible assets Additional information Book value S 000 1,200 Transfer price invoiced by P Ltd to S Lid Original cost of inventory Profit on the sale = 1,200 55,000 (40.000) 15,000 Transfer price invoiced by S Ltd to P Ltd Original cost of inventory Profit on the sale PLtd $ 000 (5.000) 10,000 400 10,400 (2.000) 8,400 (1.400) 7,000 9.000 16,000 $ 000 200 (160) 40 3,400 2,000 500 21.900 a) Consolidated cost of sales; b) Consolidated inventory balance: c) Consolidated carrying amount of fixed assets d) Consolidated retained earnings 1)S Ltd purchased inventory from P Ltd on 1 November 2620. Details are as follows: 4) Assume a tax rate of 20% 2.300 3,600 16,000 21.900 Share capital and retained earnings of S Lid were $3,000,000 and 1,000,000respectively at the date of acquisition. Fair and book values of net assets of S Ltd at the date of acquisition are shown as follows: 2)S Ltd sold inventory to P Lad during 2021. Details are as follows: $ 000 1,000 (800) 200 ||||||||▬▬▬▬▬ Fair value $ 000 1,800 600 2.400 600 (300) The remaining useful life of fixed assets of S Lad as at the date of acquisition is four years with no residual value at the end of the useful life, while the unrecognized intangible asset at the acquisition date had an indefinite useful life and showed no indications of impairment. $ 000 S Ltd $ 000 7,500 (4.000) 3.500 (500) 3.000 3,000 (600) 2,400 (400) 2,000 5.000 7,000 S Ltd $000 7,000 40% of the inventory was resold to third parties in 2021 with 60% remaining in S Ltd's inventory as at 31 December 2021. - 2,000 1,600 800 11,400 75% of the inventory was resold to the third party in 2021, and 25% of the inventory was unsold and remained in P Lid's inventory as at 31 December 2021. $ 000 360 1,400 3.000 7.000 11.400 2) Prepare the consolidation worksheets for P Ltd and S Ltd for the year ended 31 December 2021. (30 marks) 3) Determine the following amounts for 2021 analytically and compare with the amounts in your consolidation worksheets in part (2). (20 marks) 3) SLtd transferred its fixed asset to P Ltd on 10 January 2020. Details are as follows: Transfer price invoiced by S Ltd to P Lid Original cost of the fixed asset Accumulated depreciation Net book value at 10 January 2020 Profit on sale recorded by S Ltd in 2020 Original useful life at the date of purchase Remaining useful life after the transfer P had recognized a full year's depreciation on the transferred fixed asset in 2020. 300 60 6 years 3 years Required 1) Prepare the following consolidation adjustments and elimination entries for the year ended 31 December 2021. (50 marks) CJEI: Elimination of investment in S Ltd balance CJE2: Adjustment for past and current year's depreciation of undervalued fixed assets of S Ltd CJE3: Tax effect of CJE2 CJE4: Adjustment for the unrealized profit arising from downstream sale of inventory in 2020 CJES: Tax effect of CJE4 CJE6 Adjustment for the unrealized profit arising from upstream sale of inventory during 2021 CJE7: Tax effect of CJE6 CJES: Adjustment for the unrealized profit arising from transfer of fixed asset in prior year CJE9 Tax effect of CJES CJE10 Adjustment for past and current year's depreciation of the transferred fixed asset CJEII: Tax effect of CJE10 CJE12: Allocate share of post-acquisition retained earnings of S Ltd to NCI CJE13: Eliminate dividends declared by S Lid CJE14 Allocate share of current year's profit of S Ltd to NCI 2) Prepare the consolidation worksheets for P Ltd and S Ltd for the year ended 31 December 2021. (30 marks) 3) Determine the following amounts for 2021 analytically and compare with the amounts in your consolidation worksheets in part (2). (20 marks) a) Consolidated cost of sales b) Consolidated inventory balance c) Consolidated carrying amount of fixed assets Consolidated retained earnings
Expert Answer:
Answer rating: 100% (QA)
WNI Statement of Nell Assets of Leaf Share Capital Revaluation Reserve on NCA Reserve Surplus 810030... View the full answer
Related Book For
Advanced Accounting
ISBN: 978-1934319307
2nd edition
Authors: Susan S. Hamlen, Ronald J. Huefner, James A. Largay III
Posted Date:
Students also viewed these accounting questions
-
The financial statements for Lucky Ltd for the year ended 31 December 2014 were as follows. Additional information: Dividends paid during the year $60, 000 Retained earnings al 1 January 2014:...
-
After stocktaking for the year ended 31 May 20X2 had taken place, the closing inventory of Cobden Ltd was aggregated to a figure of 87,612. During the course of the audit that followed, the...
-
For the year ended 31 December 2019, Encik Remmy received annual salary of RM360,000. Besides, he received the following employment income and benefits from the company: Bonus equivalent to 1 month...
-
1 YOUR NAME: 2 Asset # 3 Asset name: 4 Date acquired: 5 Cost: 6 Depreciation method: 7 Salvage (residual) value: 8 Estimated useful life (years): 9 222 Computer 1/1/2018 $50,000 Straight Line (SL)...
-
On January 1, 2015, a city signs a capital lease for new equipment for the police department. How does the city report this transaction on government-wide financial statements? On fund financial...
-
Rebecca and Gregory, a married couple filing a joint return, reported adjusted gross income of $70,000 and total allowable itemized deductions of $13,000, including $3,100 for state income taxes, in...
-
How does make determine whether a target needs to be rebuilt?
-
Below and on page 278 are statements of earnings and financial position for Wexler Industries. a. Use professional judgment in deciding on the preliminary judgment about materiality for earnings,...
-
In general, should a country's policymakers be concerned if the country has trade imbalances with other countries? If your answer ispolicymakers "no", are there situations in which policy makers...
-
Find the simple interest for each of the following. Round to the nearest cent. 1. $27,850 at 7.75% for 100 days 2. $7800 at 9.25% for 4 months 3. A loan of $5800 at 9% made on May 22 and due July 5...
-
Create a python program in which a microcontroller can do the following operation on a DC Motor: 1) Turn on and off the DC motor 2) Be able to run the armature shaft in a clockwise or anticlockwise...
-
How many pounds of a metal containing 40% nickel must be combined with 5.7 pounds of a metal containing 20% nickel to form an alloy containing 25% nickel? Round your answer to the nearest tenth.
-
Sally and Simon are in a pub. Sallys demand curve for cocktails is P= 30 2qc. Simons demand curve for cocktails is P = 40 3qf. If one cocktail costs $10, together how many cocktails do they buy?
-
A high school has a total of 850 students. There are 60 more female students than there are male students. a. Write a system of linear equations that represents this situation. 2 answers
-
When Maggie and Glen sold the rights to their zombie repellant spray, they decided to use some of their windfall to invest for the short term until they decide what to do with the money. They are...
-
The impact of telework on organisational performance, behaviour, and culture: evidence from business services industry based on employees' perceptions 1. Introduction Challenges raised by the...
-
Suppose you live in a two-goods, static economy. During the transient existence of the economy, you will earn a total income of $10,000 (let us ignore tax for now). You also own 10% of a firm, whose...
-
Clark, PA, has been engaged to perform the audit of Kent Ltd.s financial statements for the current year. Clark is about to commence auditing Kents employee pension expense. Her preliminary enquiries...
-
On the consolidation working paper at the date of acquisition, elimination E credits the investment account by a. $ 2,400 b. $ 3,400 $ c. 5,000 d. $13,000 Use the following information to answer...
-
These descriptions of organizations relate to a city government. 1. The public school district is a legally separate entity responsible for the administration of city schools and has a separate board...
-
Present Value Analysis of Interest Rate Cap and Journal Entries At July I, 2013, Comiskey Company has $ 10,000,000 of debt due in four years with interest floating at prime. The rate is adjusted...
-
Prove that the direct product of two representations is a representation, and that the character of the direct product is the product of characters for the representations.
-
Determine the irrep content for the equivalent reducible \(S_{3}\) representations \(\Gamma^{(4)}\) and \(\Gamma^{(5)}\) of Fig. 2.4 . Data from Fig. 2.4 F(1) (2) 1 (3) (4) r(5) (6) 1 0 0 0 0 0 0 1 0...
-
Use cosets to show that a finite group with an order that is a prime number can have no proper subgroups. Show that a finite group with order equal to a prime number is isomorphic to a cyclic group....
Study smarter with the SolutionInn App