The following are the balance sheets of Apple Limited, Bell Limited and Dell Limited, as at the
Question:
The following are the balance sheets of Apple Limited, Bell Limited and Dell Limited, as at the 31 December 2018. The three companies are major players in the computer industry. Apple Limited acquired 60% of the shares in Bell Limited on January 1 2017 when the reserve balances were as follows: General reserves: $9,000 and retained earnings $8 000. The acquisition of Bell Limited consisted of an immediate cash payment of $700,000 and a share exchange of 3 shares in Apple limited for every 5 shares acquired in Bell Limited. The market price for an Apple Limited share at that date was $7.50. To date, only the cash payment has been recorded. On 1 July 2018 Apple Limited acquired 30,000 shares in Dell Limited for cash at a price of $5.20 per share. For the year ended 31 December, 2018 Bell Limited reported a profit of $84,000 (assume profit accrued evenly during the year).
Balance Sheet as at 31 December 2018 $ $ $ $ $ $
Apple Ltd | Bell Ltd | Dell Ltd | ||||
---|---|---|---|---|---|---|
Non-Current Assets Land | 1,200,000 | 300,000 | 170,000 | |||
Equipment | 360, 000 | 100,000 | 70,000 | |||
Less Depreciation | 24, 000 | 336000 | 10,000 | 90,000 | 10,000 | 60,000 |
Motor Vehicles | 250, 000 | 200 000 | 120,000 | |||
Less Depreciation | 50 ,000 | 200, 000 | 40 000 | 160 000 | 30,000 | 90,000 |
1,736000 | 550,000 | 320,000 | ||||
Investments | ||||||
Bell and Dell Ltd | 856,000 | |||||
Current Assets | ||||||
Inventory | 145,000 | 25,000 | 15,000 | |||
Accounts Receivables | 120,000 | 40,000 | 8,000 | |||
Prepayment | 12,000 | 7,000 | 2,000 | |||
Bank & Cash | 41,000 | 1,174,000 | 40,000 | 112,000 | 13,000 | 38,000 |
2,910,000 | 662,000 | 358,000 |
Equity & Liabilities | ||||||
$1 Ordinary Share | 1,200,000 | 200,000 | 100,000 | |||
Reserves | ||||||
General reserves | 170,000 | 30,000 | 0 | |||
Retained earnings | 246,000 | 24,000 | 36,000 | |||
Non-Current Liabilities | ||||||
4% Debentures | 976,000 | 362,000 | 200,000 | |||
Current Liabilities | ||||||
Trade Payables | 145,000 | 8,000 | 15,000 | |||
Taxation | 173,000 | 38,000 | 7,000 | |||
318,000 | 46,000 | 22,000 | ||||
2,910,000 | 662,000 | 358,000 |
ADDITIONAL INFORMATION
1. At the date of the acquisition the directors of Apple Limited determined that the fair market value of land owned by Bell Limited was $250 000, however no adjustments were made.
2. At December 31 2018, goodwill was impaired by $50,000.
3. During the year Apple Limited sold goods to Bell Limited for $280 000, after charging a mark-up of 40%. At 31 December 2018 only 50% of the goods were sold.
4. During the year Apple Limited transferred a motor vehicle to Bell Limited at a price of $90,000, the motor vehicle was new and cost Apple Limited $60,000. Bell Limited depreciated the motor vehicle at 10% of the cost to them.
5. Non-Controlling Interest should be valued at $5.50 per share at acquisition date. Required: Prepare the Consolidated Balance Sheet for the Apple Limited Group as at 31 December 2018.
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon