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In: Accounting
PRE AND POST ACQUISITION DIVIDENDS On 1 July 2023, Gordon Ltd acquired all the issued shares...
PRE AND POST ACQUISITION DIVIDENDS
| On 1 July 2023, Gordon Ltd acquired all the issued shares (cum div.) of Henry Ltd for $528000. | |||
| At that date, the financial statements of Henry Ltd showed the following information. | |||
| Share capital | 220000 | ||
| General reserve | 110000 | ||
| Retained earnings | 154000 | ||
| Dividend payable | 44000 | ||
| All the assets and liabilities of Gordon Ltd were recorded at amounts equal to their fair | |||
| values at the acquisition date. The dividend payable reported at 1 July 2023 by Henry Ltd | |||
| was paid on 15 August 2023. Henry Ltd paid a further dividend of $55000 on 2 February 2024 | |||
|
from post-acquisition profits. |
|||
3. Prepare the consolidation worksheet entries for Gordon Ltd's group at 30 June 2024.
4. How would the entries for 2 and 3 above change if the shares were bought on an ex dividend basis?
Solutions
Expert Solution
consolidation worksheet entries for Gordon Ltd's group at 30 June 2024.
| 1 july 2023 |
dr share capital dr genereal reserve dr retained earnings dr dividend payable cr investment in subsidiary cr dividend recievable (aquired all the issued shares of henry ltd) |
220000 110000 154000 44000 |
484000 44000 |
| 15 aug 2023 |
Dr dividend revenue Cr dividend paid (the divident payable on i july was paid.) |
44000 |
44000 |
| 2 feb 2024 |
Dr bank Cr dividend from subsidiary company (Henry Ltd paid a further dividend of $55000 on 2 February 2024 from post aquisitioon profit) |
55000 |
55000 |
|
Dr dividend from subsidiary company Cr profit and loss account (transfer of dividend from subsidiary company to profit and loss account. |
55000 |
55000 |
How would the entries for 2 and 3 above change if the shares were bought on an ex dividend basis?
| 1 july 2023 |
dr share capital dr genereal reserve dr retained earnings cr investment in subsidiary (aquired all the issued shares of henry ltd) |
220000 110000 154000 |
484000 |
| 15 aug 2023 |
there wiil be no entry |
||
| 2 feb 2024 |
Dr bank Cr dividend from subsidiary company (Henry Ltd paid a further dividend of $55000 on 2 February 2024 from post aquisitioon profit) |
55000 |
55000 |
|
Dr dividend from subsidiary company Cr profit and loss account (transfer of dividend from subsidiary company to profit and loss account. |
55000 |
55000 |
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True
False
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