Port Ltd acquired 100% shares in Stable Ltd on 01 January 2017 exclusively with a view to
Question:
Port Ltd acquired 100% shares in Stable Ltd on 01 January 2017 exclusively with a view to resale and meets the criteria for classification as held for sale. Port Ltd year-end is 30 June
On 01 January 2017, the following information is relevant:
The identifiable liabilities of Stable Ltd have a fair value of $ 60 million.
The acquired assets of Stable Ltd have a fair value of $ 200 million.
The expected costs of selling Stable Ltd are $ 8 million.
On 30 June 2017, the assets of Stable Ltd have a fair value of $ 185 million. The liabilities have a fair value of $ 50 million and the selling costs remain at $ 8 million
REQUIRED
1.Discuss how Stable Ltd will be treated in the Port Ltd Group financial statements on acquisition and at 30 June 2017. [20 Marks]
2. Explain how a subsidiary acquired exclusively with a view to subsequent disposal should be accounted.
Financial Accounting and Reporting
ISBN: 978-0273744443
14th Edition
Authors: Barry Elliott, Jamie Elliott