50.1K

Verified Solution

Link Copied!

Please answer all the questions. I also need personal tutoring. Please c on tact me.

2. John Ltd acquired its 75% interest in Slo Ltd on 1 july 2021 for $750,000 when all assets of Slo Ltd were fairly valued, except for an equipment that had a fair value $6,000 greater than its carrying amount. The cost of the equipment was $30,000 and it had accumulated depreciation of $12,000. The equipment had original estimated useful life of 5 years. Capitals of Jo Ltd were: Share Capital - $550,000 Retained Earnings - $300,000 The management of John Ltd measures any non-controlling interest (NCI) in Slo Itd at fair value. Assume that there are no intra-group transactions or deferred tax consequences from 1 july 2021 to 30 June 2022. Tax rate is 30%. Reporting date is 30 June. Jimmy Ltd has an investment in other entities. Required: a) Prepare an acquisition analysis at 1 July 2021, to determine goodwill or gain on bargain purchase at acquisition. Useful table to help answer: Acquisition analysis slo Ltd ($). Jimmy (Ltd) $ NCI ($) b) Prepare all consolidation/ elimination journals at 30 June 2022. Narrations are required. c) John LTD owns 50% of Sophia Ltd's ordinary shares. The remaining 50% of of Sophia Ltd's ordinary shares are owned by Malik Ltd. John Ltd and Malik Ltd has four seats on the board, with no party having the casting vote. However, John Ltd appoints the managing director. Profits are split 50-50 after the provision of the managing director's salary. John Ltd is the only holder of 1,000 options in Sophia Itd, which are exercisable at any time at a 5.55% discount to the fair value of the ordinary shares at the exercise date. Should John Itd consolidate Sophia Ltd? Justify decision with an explanation of why or why not? 2. John Ltd acquired its 75% interest in Slo Ltd on 1 july 2021 for $750,000 when all assets of Slo Ltd were fairly valued, except for an equipment that had a fair value $6,000 greater than its carrying amount. The cost of the equipment was $30,000 and it had accumulated depreciation of $12,000. The equipment had original estimated useful life of 5 years. Capitals of Jo Ltd were: Share Capital - $550,000 Retained Earnings - $300,000 The management of John Ltd measures any non-controlling interest (NCI) in Slo Itd at fair value. Assume that there are no intra-group transactions or deferred tax consequences from 1 july 2021 to 30 June 2022. Tax rate is 30%. Reporting date is 30 June. Jimmy Ltd has an investment in other entities. Required: a) Prepare an acquisition analysis at 1 July 2021, to determine goodwill or gain on bargain purchase at acquisition. Useful table to help answer: Acquisition analysis slo Ltd ($). Jimmy (Ltd) $ NCI ($) b) Prepare all consolidation/ elimination journals at 30 June 2022. Narrations are required. c) John LTD owns 50% of Sophia Ltd's ordinary shares. The remaining 50% of of Sophia Ltd's ordinary shares are owned by Malik Ltd. John Ltd and Malik Ltd has four seats on the board, with no party having the casting vote. However, John Ltd appoints the managing director. Profits are split 50-50 after the provision of the managing director's salary. John Ltd is the only holder of 1,000 options in Sophia Itd, which are exercisable at any time at a 5.55% discount to the fair value of the ordinary shares at the exercise date. Should John Itd consolidate Sophia Ltd? Justify decision with an explanation of why or why not

Answer & Explanation Solved by verified expert

See Answer