There is Parent company and their Sub Company that was acquired on the 1st of July 2022.
Question:
There is Parent company and their Sub Company that was acquired on the 1st of July 2022. Now that the financial year is over we need to prepare the consolidation journal entries, pre-acquisition entry and the consolidation adjustment entries required to eliminate intragroup transactions.
Q1- What is the journal entry to Eliminate Investment in Sub- What are the debits and credits? (6lines)
Investment in Sub | $ 810,000 |
Goodwill | $ 7,000 |
Sub's General Reserve | $ 30,000 |
Sub's Retained Earnings | $ 410,000 |
Sub's Share Capital | $ 300,000 |
Revlauation Surplus | $ 63,000 |
Q2- What is the journal entry to adjust depreciation on Equipment to FV- What are the debits and credits? (4lines)
Subs accumulated depreciation on buildings | 2,000 |
Sub's Accumulated Depreciation in equipment | $196,000 |
Fair Value Adj | $ 90,000 |
Equipment historical cost | $ 496,000 |
Carrying value | $ 310,000 |
FV | $ 400,000 |
Life Exp | 6 |
Sale carrying value | $ 76,500 |
Sub Dep rec | $ 10,000 |
Useful remaining life | 4.5 |
Gain on sale | $ 13,500 |
Parent Annual Dep 102k/6 | $ 17,000 |
Parent Annual Dep 76.5k/4.5 | $ 17,000 |
Sub Annual Dep 90/4.5 | $ 20,000 |
Dep exp | $ 17,000 |
Q3- What are the journal entries to adjust a) dividend declared and paid by Sub during the year b) dividend declared by Sub but not yet paid c)dividend receivable from Sub recorded by Parent
Dividends Declared | $ 18,000 |
Dividends paid | $ 8,000 |
Dividends Payable | $ 18,000 |
Auditing An International Approach
ISBN: 978-0071051415
6th edition
Authors: Wally J. Smieliauskas, Kathryn Bewley