On July 1, 2012, Eagle Ltd. acquired 75% of the issued shares of Heron Ltd. for...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On July 1, 2012, Eagle Ltd. acquired 75% of the issued shares of Heron Ltd. for $125,750. At this date, the accounts of Heron Ltd. included the following balances: $80,000 Share Capital General Reserve 20,000 Retained Earnings 40,000 All the identifiable assets and liabilities of Heron Ltd. were recorded at fair value except for the following: Fair value Carrying amount $35,000 $41,000 50,000 70,000 Inventory 20,000 25,000 Adjustments for the differences between carrying amounts and fair values are to be made on consolidation. The plant has a further 5-year life. 40% of the inventory was sold to outsiders by June 2013 while 60% of the inventory was sold to Eagle Ltd for $18,000by June 30, 2014. Eagle Ltd. uses the partial goodwill method. During the 3 years since acquisition, Heron Ltd. has recorded the following annual results and the dividend declared (declared on 30 June and paid on 15 July each year); Plant (cost $50,000) Land Year ended June 30, 2013 June 30, 2014 June 30, 2015 Profit/(Loss) $10,000 23,000 (6,000) DIVIDEND DECLARED $2,000 4,500 0 Heron Ltd transferred $5,000 from the general reserve to retained earnings on June 30, 2013. The group transfers the valuation reserves to retained earnings when an asset is sold or fully consumed and de-recognized. The tax rate is 30%. Required: 1. Prepare the Acquisition Analysis on 1 July 2012. 2. Prepare the consolidation worksheet entries as at July 1, 2012. 3. Prepare the consolidation worksheet entries for the year ended June 30, 2013. 4. Prepare the consolidation worksheet entries for the year ended June 30, 2014. 5. Prepare the consolidation worksheet entries for the year ended June 30, 2015.. On July 1, 2012, Eagle Ltd. acquired 75% of the issued shares of Heron Ltd. for $125,750. At this date, the accounts of Heron Ltd. included the following balances: $80,000 Share Capital General Reserve 20,000 Retained Earnings 40,000 All the identifiable assets and liabilities of Heron Ltd. were recorded at fair value except for the following: Fair value Carrying amount $35,000 $41,000 50,000 70,000 Inventory 20,000 25,000 Adjustments for the differences between carrying amounts and fair values are to be made on consolidation. The plant has a further 5-year life. 40% of the inventory was sold to outsiders by June 2013 while 60% of the inventory was sold to Eagle Ltd for $18,000by June 30, 2014. Eagle Ltd. uses the partial goodwill method. During the 3 years since acquisition, Heron Ltd. has recorded the following annual results and the dividend declared (declared on 30 June and paid on 15 July each year); Plant (cost $50,000) Land Year ended June 30, 2013 June 30, 2014 June 30, 2015 Profit/(Loss) $10,000 23,000 (6,000) DIVIDEND DECLARED $2,000 4,500 0 Heron Ltd transferred $5,000 from the general reserve to retained earnings on June 30, 2013. The group transfers the valuation reserves to retained earnings when an asset is sold or fully consumed and de-recognized. The tax rate is 30%. Required: 1. Prepare the Acquisition Analysis on 1 July 2012. 2. Prepare the consolidation worksheet entries as at July 1, 2012. 3. Prepare the consolidation worksheet entries for the year ended June 30, 2013. 4. Prepare the consolidation worksheet entries for the year ended June 30, 2014. 5. Prepare the consolidation worksheet entries for the year ended June 30, 2015..
Expert Answer:
Related Book For
Financial and Managerial Accounting
ISBN: 978-0538480895
11th Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
Posted Date:
Students also viewed these accounting questions
-
Mary Ltd acquired 75% of the issued shares of Edith Ltd on 1 July 2018. In exchange for these shares, Mary Ltd gave consideration of $26 000 cash and 10 000 shares in Mary Ltd, these having a fair...
-
Peter Ltd acquired 70% of the issued shares of Pan Ltd for $555,000 paid in cash. At the date of acquisition 1 July 2018 the reported shareholders equity of Pan Ltd was: Share Capital 500,000 General...
-
MCO Ltd acquired 80% of the issued shares of PKP Ltd for $174,800 in 2018. MCO Ltd recorded a goodwill of $5,000 from the acquisition. (a) At 30 June 2020, inventory of MCO Ltd included an item sold...
-
Ted and Joan Kramer have assets of $290,000 and are planning for Joan to enter a nursing home. The Kramers would like to apply for Medicaid benefits to pay for Joan's care. What should they do to...
-
(a) Summarize Jia Lis legal rights in this situation. (b) Discuss the likelihood that Jia Li must pay Visa for any illegal charges to the account. Jia Li Sun, took her sister-in-law Ah-Iam Johnson...
-
Consider the bottle wall thickness measurements described in Exercise 8-29. Compute a 90% lower tolerance bound on bottle wall thickness that has confidence level 90%. Why would a lower tolerance...
-
Reconsider the data from Problem 4. Management has expressed some concern over the life of the project and the impact of possible early termination. As a result, you have developed additional data...
-
Governmental Funds Statement of Revenues Expenditures and Changes in Fund Balance. You have recently started working as the controller for a small county. The county is preparing its financial...
-
A bug sits on a record moving at a constant angular speed of 0 = 3.5 rad/s. Starting at t = 0 s, the record player is turned off and is given a constant angular acceleration of = 1.0 rad/s 2 . The...
-
You have taken out a loan of $19,000 for 4 years with an interest rate of 3% compounded annually. The loan will be repaid by end of year payments. Fill in all the boxes below, and round all entries...
-
? ?? Clouds Corporation began operations in 2018. The year-end cost and fair values for its available-for-sale portfolio are as follows: December 31, 2018 December 31, 2019 December 31, 2020 Cost...
-
Five years have passed, and Alonso, age 45, signs a 10-year employment contract, which includes a one-time signing bonus, with a corporate-owned professional soccer club. His annual base salary with...
-
Buchanan Corp. is refunding $13 million worth of 11% debt. The new bonds will be issued for 8%. The corporation's tax rate is 39%. The call premium is 8%. What is the net cost of the call premium...
-
Domina Co considering raising some new finance but there is disagreement at the Board level how best to proceed. The managing director thinks that the company should retain control in the hands of...
-
A simple collateralised debt obligation (CDO) is securitised from a pool of mortgage loans and corporate loans with face value 5 million and overall rate of return of 5.5%. The sizes of the senior...
-
Payment of $903 due 2 months ago and $459 due today are to be repaid by a payment of $400 one month from today and the balance in 8 months from now. If money is worth 6% compounded monthly, and the...
-
Ben's Burgers paid $300,000 for a piece of equipment. Ben uses straight-line depreciation. Currently the equipment has a balance in the accumulated depreciation account of $100,000. If the asset has...
-
Why did management adopt the new plan even though it provides a smaller expected number of exposures than the original plan recommended by the original linear programming model?
-
After the accounts have been adjusted at October 31, the end of the fiscal year, the following balances were taken from the ledger of Silver Gate Delivery Services Co: Retained Earnings $ 800,000...
-
Based on the data in Exercise 21-7 and assuming that the average compensation per hour for staff is $40 and for partners is $150, prepare a professional labor cost budget for each department for...
-
A company reports the following: Net sales ..........$1,200,000 Average total assets..... 750,000 Determine the ratio of net sales to assets.
-
Identify the sources and discuss the consequences of bank runs, bank panics, and financial crises.
-
Explain why and how the government intervenes in the financial system, and the problems the government safety net creates.
-
Deflation is the rate of decline in the aggregate price level. Why might unexpected deflation be of particular concern to someone managing a bank?
Study smarter with the SolutionInn App