Question

Question 5

On 1/1/2017 Zamboor company purchased 100 % of Al Otaibi company by SR 500,000 , and paid SR 30,000 for commission and consulting expenses and SR 20.000 indirect expenses for registering. The balance sheet of Zamboor and Al Otaibi company on 31/12/2016 before of purchase was:

particulars	Zamboor	Al Otaibi (book value)	Al Otaibi (fair value )
Cash Account receivables Inventories	600,000 400,000 450,000	25,000 300,000 100,000	25,000 340,000 150,000
Total assets	1.450.000	425.000	515.000
Account payables Capital Add. Capital	200,000 700,000 550,000	50,000 200,000 175,000	65,000
Total liabilities	1.450.000	425.000

Requirements:

From the information mentioned above, Use purchase method to Prepare consolidated Balance Sheet at Date of Acquisition and fill in the blanks in the table of consolidated sheet.

Particulars	Zamboor	Al Otaibi (book value)	Consolidation adjustment Dr                   Cr		Consolidation financial
Cash Account receivables Inventories Goodwill Investment	400,000 450,000	25,000 300,000 100,000
Total assets	1.430.000	425.000
Account payables Capital Add. Capital	800,000 2,700,000 950,000	50,000 200,000 175,000
	1430000	425,000

Answer 1

Answer: Goodwill 125000

Purchase price 500000

Net assets acquired 375000

Goodwill= Purchase Consideration Minus Total Net assets that have been acquired

=500,000-(200,000+175,000)

=125,000

0 SR Zamboor Al Otaibi Cons DR Cons DR Cons Financial Cash 600000 25000 0 -500000 125000 AR 400000 300000 0 700000 Inventorie 450000 100000 0 0 5500001 Goodwill 0 0 125000 0 125000 Investmer 0 0 0 0 0 Total asse 1450000 425000 125000 -500000 1500000 On 1/1/2017 Zamboor company purchased 100 % 30,000 for commission and consulting expenses a balance sheet of Zamboor and Al Otaibi company particulars Zamboor Al Otaibi (book valu Cash 600,000 25,000 Account receivables400,000 300,000 Inventories 450,000 100,000 50000 0 Accounts Capital Ad Add capita 200000 0 200,000 700,000 550,000 1450000 0 -200000 -175000 -375000 250000 700000 550000 1500000 0 175000 425000 0 Total assets 1.450.000 425.000 Account payables 200,000 50,000 Capital 700,000 200,000 Add. Capital 550,000 175,000 Total liabilities 1.450.000 425.000 Requirements: From the information mentioned above, Use puro at Date of Acquisition and fill in the blanks in the Particulars Zamboor Al Otaibi (book valu Purchase Net assets Goodwill 500000 375000 125000 Cash 400,000 25,000 Account receivables450,000 300,000 Inventories 100,000 Goodwill Investment Total assets 1.430.000 425.000 Account payables 800,000 50,000