Question
In: Accounting
The summarized statement of financial positions of A Ltd and B Ltd as at 31 December...
The summarized statement of financial positions of A Ltd and B Ltd as at 31 December 2018 are as follows:
|
A Ltd |
B Ltd |
|
|
Non-Current Assets at book value |
60,000 |
46,000 |
|
Investment in B Ltd |
75,000 |
|
|
Current assets |
||
|
Inventory |
32,000 |
13,000 |
|
Receivables |
27,000 |
17,000 |
|
Bank |
1,000 |
2,000 |
|
195,000 |
78,000 |
|
|
Financed by: |
||
|
Share capital (Sh 1ordinary shares) |
100,000 |
50,000 |
|
Retained profits |
70,000 |
12,000 |
|
170,000 |
62,000 |
|
|
Liabilities |
25,000 |
16,000 |
|
195,000 |
78,000 |
A Ltd purchased the entire share capital of B Ltd on 31 December 2018. The Non-Current Assets of B Ltd are considered to possess a fair value of sh.54,000 but there are no material differences between the book values and fair values of the remaining assets.
Required
- Calculate the goodwill arising on consolidation
- Prepare the consolidated statement of financial position of A Ltd and it subsidiary as at 31 December 2018
Note: Ignore depreciation
Solutions
Expert Solution
| PRICE PAID | $ 75,000.00 | |
| FAIR VALUE OF ASSETS(NET) | ||
| NON CURRENT ASSETS | $ 54,000.00 | |
| INVENTORY | $ 13,000.00 | |
| RECEIVABLES | $ 17,000.00 | |
| BANK | $ 2,000.00 | |
| LESS: | ||
| LIABILITIES | $ 16,000.00 | |
| NET ASSET | $ 70,000.00 | |
| GOODWILL | $ 5,000.00 | |
| CONSOLIDATE BALANCSHEET AS ON 31-12-2018 | |
| ASSETS | |
| Non-Current Assets (60000+54000) | $ 114,000.00 |
| Goodwill acquired in business combination | $ 5,000.00 |
| Current assets | |
| Inventory (32000+13000) | $ 45,000.00 |
| Receivables (27000+17000) | $ 44,000.00 |
| Bank (1000+2000) | $ 3,000.00 |
| TOTAL ASSETS | $ 211,000.00 |
| EQUITY & LIABILITIES | |
| Share capital (Sh 1ordinary shares) | $ 100,000.00 |
| Retained profits | $ 70,000.00 |
| Liabilities(25000+16000) | $ 41,000.00 |
| TOTAL EQUITY AND LIABILITIES | $ 211,000.00 |
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