On January 1, 16, Brown Inc. acquired Larson Company’s net assets in exchange for Brown’s common stock

On January 1, 16, Brown Inc. acquired Larson Company’s net assets in exchange for Brown’s common stock with a par value of $100,000 and a fair value of $800,000. Brown also paid $10,000 in direct acquisition costs and $15,000 in stock issuance costs.

On this date, Larson’s condensed account balances showed the following:

  Book Value Fair Value
Current Assets $280,000 $370,000
Plant and Equipment 440,000 480,000
Accumulated Depreciation (100,000)  
Intangibles – Patents 80,000 120,000
Current Liabilities (140,000) (140,000)
Long-Term Debt (100,000) (110,000)
Common Stock (200,000)  
Other Paid-in Capital (120,000)  
Retained Earnings (140,000)  

 

Required: Record Brown’s purchase of Larson Company’s net assets.

 

Shrieves Casting Company is considering adding a new line to its product mix

Shrieves Casting Company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by Sidney Johnson, a recently graduated MBA. The production line would be set up in unused space in Shrieves’s main plant. The machinery’s invoice price would be approximately $200,000, another $10,000 in shipping charges would be required, and it would cost an additional $30,000 to install the equipment. The machinery has an economic life of 4 years, and Shrieves has obtained a special tax ruling that places the equipment in the MACRS 3-year class. The machinery is expected to have a salvage value of $25,000 after 4 years of use. The new line would generate incremental sales of 1,250 units…

Parent Ltd acquired 100% of the issue shares of Subsidiary Pty Ltd

Question 1 Consolidation Parent Ltd Subsidiary Ltd DR CR Consolidated Sales 700,000 500,000 Dividend income 2,000 0 Expenses 290,000 260,000 Profit 412,000 240,000 Retained earnings 1 July 2015 300,000 250,000 Less Dividend declared -1,000 -2,000 Retained earnings 30 June 2016 711,000 488,000 Share capital 1,000,000 600,000 General reserve 200,000 0 Trade and other creditors 530,000 208,000 Dividend payable 1,000 2,000 Income tax payable 140,000 42,000 2,582,000 1,340,000 Trade and other receivables 643,000 508,000 Dividend receivable 2,000 0 Shares in Subsidiary Ltd 900,000    – Property plant and equipment (net) 730,000 710,000 Inventories 200,000 20,000 Other assets 107,000 102,000 Goodwill on consolidation 2,582,000 1,340,000   Parent Ltd paid for subsidiary’s equity for $900,000       Question 2 Consolidation Parent Ltd Subsidiary…

Fast Feet Couriers Limited’s Balance Sheets as at 30 June 2016 and 2017 were as follows

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ACC701 – The Sunshine Coast Bank Limited has set monthly key performance indicators

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Australasia Ltd started operating on 1 July 2017 with 12 employees

Australasia Ltd started operating on 1 July 2017 with 12 employees. Three years later all of those employees were still with the company. On 1 July 2019 the company hired 15 more people but by 30 June 2020 only 10 of those employed at the beginning of that year were still employed by Australasia Ltd. All employees are entitled to 13 weeks’ long-service leave after a conditional period of 10 years of employment with Australasia Ltd. At 30 June 2020 Australasia Ltd estimates the following: the aggregate annual salaries of all employees hired on 1 July 2017 is now $600,000 the aggregate annual salaries of all current employees hired on 1 July 2019 is now $400,000 the probability that employees hired…

On 1 July 2017, Westland Limited an Australian company acquired the issued shares of Bull Limited

ACC322 PQ 17.8                          Translation to presentation currency On 1 July 2017, Westland Limited an Australian company acquired the issued shares of Bull Limited a company incorporated in the United States. The draft statement of profit or loss and other comprehensive income and statement of financial position of Bull Ltd at 30 June 2018 was as follows:   US$ US$ Sales revenues 1,600,000 Cost of sales: Opening inventory 140,000 Purchases 840,000 980,000 Closing inventory 280,000 700,000 Gross profit 900,000 Expenses: Depreciation 90,000 Other 270,000 360,000 Profit before income tax 540,000 Income tax expense 200,000 Profit 340,000 Retained earnings as at 1 July 2017 200,000 540,000 Dividend paid 120,000 Dividend declared 200,000 320,000 Retained earnings as at 30 June 2018 220,000 2018 2017…

On 1 July 2017. Echidna Ltd, an Australian company, acquired the issued shares of Bear Ltd

ACC322 PQ 17.8                          Translation to presentation currency On 1 July 2017. Echidna Ltd, an Australian company, acquired the issued shares of Bear Ltd. a company incorporated in the United States. The draft statement of profit or loss and other comprehensive income and statement of financial position of Bear Ltd at 30 June 2018 was as follows:   US$ US$ Sales revenues 1,600,000 Cost of sales: Opening inventory 140,000 Purchases 840,000 980,000 Closing inventory 280,000 700,000 Gross profit 900,000 Expenses: Depreciation 90,000 Other 270,000 360,000 Profit before income tax 540,000 Income tax expense 200,000 Profit 340,000 Retained earnings as at 1 July 2017 200,000 540,000 Dividend paid 120,000 Dividend declared 200,000 320,000 Retained earnings as at 30 June 2018 220,000 2018 2017…

On 1 July 2.017. Melbourne Ltd, an Australian company, acquired the issued shares of Memphis Ltd

ACC322 PQ 17.8                          Translation to presentation currency On 1 July 2.017. Melbourne Ltd, an Australian company, acquired the issued shares of Memphis Ltd. a company incorporated in the United States. The draft statement of profit or loss and other comprehensive income and statement of financial position of Memphis Ltd at 30 June 2018 was as follows:   US$ US$ Sales revenues 1,600,000 Cost of sales: Opening inventory 140,000 Purchases 840,000 980,000 Closing inventory 280,000 700,000 Gross profit 900,000 Expenses: Depreciation 90,000 Other 270,000 360,000 Profit before income tax 540,000 Income tax expense 200,000 Profit 340,000 Retained earnings as at 1 July 2017 200,000 540,000 Dividend paid 120,000 Dividend declared 200,000 320,000 Retained earnings as at 30 June 2018 220,000 2018 2017…

Sydney Ltd is a manufacturer of sheepskin products in Australia

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The accountant at Venus Ltd has asked you to prepare the statement of profit or loss

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Lion Ltd is an international company resident in Singapore

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