During the years, the following intercompany sales of inventory were made: 2019/2020 2020/2021 On 1 April...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
During the years, the following intercompany sales of inventory were made: 2019/2020 2020/2021 On 1 April 2019, P Limited acquired 75% of S Limited's ordinary shares for S225,000 when the financial statement for S Limited was as follows: Sales from P Limited to S Limited Original cost Gross profit % unsold to third parties at year-end 30,000 18,000 12,000 30% Note Book value Fair value 10% Fixed assets, net Inventory Accounts receivable (1) (2) 120,000 35,000 76,000 160,000 40,000 76,000 22,000 (37,000) Sales from S Limited to P Limited Original cost Gross profit % unsold to third parties at year-end 42,000 35,000 Other assets Accounts payable Contingent liabilitics Total net assets 22,000 (37,000) 7,000 60% (3) 216,000 (8,000) 253,000 The financial statements of P Limited and S Limited for the year ended 31 March 2021 are shown in the Consolidation Worksheet on Page 5-6. Share capital 160,000 56.000 Retained earnings 216,000 Required: Notes: (a) Prepare the consolidation adjusting entrics for the year ended 31 March 2021. (46 marks) (1) Remaining useful life of the fixed assets was 4 years. (2) The undervalued inventory of S at the date of acquisition was sold to third parties in January 2020. (3) The contingent liability of $8,000 in respect of claims from a customer and was paid off and recognized as expenses by S in December 2020. (4) Goodwill was impaired as follows: 20% for the year ended 31 March 2020 10% for the year ended 31 March 2021 (5) The purchase consideration paid by P Limited was proportional to P's share of the fair valuc of S Limited as an entity. (6) Non-controlling interests was measured at its share of fair valuc of S Limited as at acquisition date. (b) Prepare the consolidation worksheet for the year ended 31 March 2021. (29 marks) Ugnore deferred taxes.) On 1 July 2019, S Limitod transferred its fixed assets to P Limited with details as follows: Transfer price Original cost Less: Accumulated depreciation Net book value Profit on sale 10,800 10,000 (4,000) 6,000 4,800 The remaining useful life of the asset was 4 years and it had no residual value on the date of transfer. S Limited adopts straight-line depreciation method on all the fixed assets. During the years, the following intercompany sales of inventory were made: 2019/2020 2020/2021 On 1 April 2019, P Limited acquired 75% of S Limited's ordinary shares for S225,000 when the financial statement for S Limited was as follows: Sales from P Limited to S Limited Original cost Gross profit % unsold to third parties at year-end 30,000 18,000 12,000 30% Note Book value Fair value 10% Fixed assets, net Inventory Accounts receivable (1) (2) 120,000 35,000 76,000 160,000 40,000 76,000 22,000 (37,000) Sales from S Limited to P Limited Original cost Gross profit % unsold to third parties at year-end 42,000 35,000 Other assets Accounts payable Contingent liabilitics Total net assets 22,000 (37,000) 7,000 60% (3) 216,000 (8,000) 253,000 The financial statements of P Limited and S Limited for the year ended 31 March 2021 are shown in the Consolidation Worksheet on Page 5-6. Share capital 160,000 56.000 Retained earnings 216,000 Required: Notes: (a) Prepare the consolidation adjusting entrics for the year ended 31 March 2021. (46 marks) (1) Remaining useful life of the fixed assets was 4 years. (2) The undervalued inventory of S at the date of acquisition was sold to third parties in January 2020. (3) The contingent liability of $8,000 in respect of claims from a customer and was paid off and recognized as expenses by S in December 2020. (4) Goodwill was impaired as follows: 20% for the year ended 31 March 2020 10% for the year ended 31 March 2021 (5) The purchase consideration paid by P Limited was proportional to P's share of the fair valuc of S Limited as an entity. (6) Non-controlling interests was measured at its share of fair valuc of S Limited as at acquisition date. (b) Prepare the consolidation worksheet for the year ended 31 March 2021. (29 marks) Ugnore deferred taxes.) On 1 July 2019, S Limitod transferred its fixed assets to P Limited with details as follows: Transfer price Original cost Less: Accumulated depreciation Net book value Profit on sale 10,800 10,000 (4,000) 6,000 4,800 The remaining useful life of the asset was 4 years and it had no residual value on the date of transfer. S Limited adopts straight-line depreciation method on all the fixed assets.
Expert Answer:
Answer rating: 100% (QA)
a CONSOLIDATION ENTRIES DEBIT AMOUNTS CREDIT AMOUNTS Investment in S Ltd 225000 To Bank 225000 Being amount invested in acquiring 75 Controlling interest in S Ltd Goodwill account 35250 Fixed Assets 4... View the full answer
Related Book For
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
Posted Date:
Students also viewed these accounting questions
-
Introduces you to the intercompany sales of inventory, land, and depreciable assets as these transfers result in similar consolidation procedures. Discuss the effects of intercompany transactions...
-
On January 1, Year 9, P Corp. acquired 75% of S Corp. for $1,500,000. P uses the cost method to account for its investment in S. On January 1, Year 9, S's retained earnings and common shares were...
-
Required: 1. Prepare common-size comparative income statements for the two years for Beach Motors (Pty) Ltd. (11) 2. What observations can you make about the common-size statements? List at least...
-
Discuss documents that need to be included in recovery documentation?
-
Nobody likes paying taxes, but cheating is not the way to get out of it! It is believed that 10% of all taxpayers intentionally claim some deductions to which they are not entitled. If 9% of all...
-
A transformer designed for a 120-V ac input will often burn out if connected to a 120-Vdc source. Explain.
-
What are the ways that social media sites are affecting courtrooms?
-
If a projectile is fired due east from a point on the surface of Earth at a northern latitude λ with a velocity of magnitude V0 and at an angle of inclination to the horizontal of a, show that...
-
The following data has been provided by Lee Company regarding its inventory purchases and sales throughout the year. Transaction Units Cost per Unit January 1 Balance 185 $86 March 14 Sale 54 May 23...
-
Use the accompanying data table regarding retirement funds. a. Construct a table that tabulates market cap, risk, and rating. b. What conclusions can you reach concerning differences among the funds...
-
A credit policy proposal is expected to increase sales by $2,500,000 annually. The variable cost of these sales is $2,050,00 and bad debt losses will be expected to be 4.5%. The annual cost of...
-
Q1 Question 2 (6 points) On 1/1/2023 Hatch Inc. acquired 100% assets of Stewart Com and paid $500,000 cash Below includes the information of assets and liabilities of Stewart Com right before the...
-
Income Statement Completing this activity will help you learn to: Determine total revenues, expenses, and net income for a period and compare results over time. Extract information from a data set...
-
Find the Discounted Payback period for the following project. The discount rate is 8% Project X Initial Outlay $17629 Year 1 $5339 Year 2 $5436 Year 3 $5582 Year 4 $8078
-
ducksRus sells a duck call having a contribution margin of $5. The president foresees sales up to 100,000 units in the coming period. The company's fixed costs for the period are $275,000. a. What is...
-
identify your own example of improper sampling from your day-to-day life (try not to repeat examples shared by your peers). Be sure to provide the sampling method used, why the sampling method is...
-
Find the equation of the line between the points (2, 3) and (4,-1)
-
2. In the circuit given in Figure 2, i,(t) = 5.67cos(5t)A and v (t) = 70.71 cos(5t 60) V a) Find the equivalent load impedance. State whether the load is inductive or capacitive. b) Calculate the...
-
Presented below is selected information for Palmiero Company. 1. Palmiero purchased a patent from Vania Co. for $1,500,000 on January 1, 2017. The patent is being amortized over its remaining legal...
-
How should the amount of interest capitalized be disclosed in the notes to the financial statements? How should interest revenue from temporarily invested excess funds borrowed to finance the...
-
Explain the difference between the proportional method and the incremental method of allocating the proceeds of lump-sum sales of share capital.
-
The flow about a \(150 \mathrm{~mm}\) artillery projectile which travels at \(600 \mathrm{~m} / \mathrm{s}\) through still air at \(30^{\circ} \mathrm{C}\) and absolute pressure \(101.4...
-
Consider water flow around a circular cylinder, of diameter \(D\) and length \(l\). In addition to geometry, the drag force is known to depend on liquid speed, \(V\), density, \(ho\), and viscosity,...
-
A 1:10 scale model of a tractor-trailer rig is tested in a wind tunnel. The model frontal area is \(A_{m}=0.1 \mathrm{~m}^{2}\). When tested at \(V_{m}=75 \mathrm{~m} / \mathrm{s}\) in standard air,...
Study smarter with the SolutionInn App