Exam 27: Consolidation: Wholly Owned Entities

Before undertaking the consolidation process, it may be necessary to make the following adjustments in relation to the individual statements if the end of the subsidiary's financial period does not coincide with the:

The consolidation worksheet entries have an impact on:

Prince Limited acquired 100% of the share capital of Charming Limited for a purchase consideration of $190 000. At acquisition date, the net fair value of Charming Limited's assets, liabilities and contingent liabilities was $175 000 including goodwill with a carrying amount of $5 000. The company tax rate is 30%. The unrecorded amount of goodwill that must be recognised on the consolidation worksheet is:

Which of the following statements is incorrect?

At the date of acquisition, a subsidiary had recorded a dividend payable of $10 000. Assuming that the shares were acquired on a cum div. basis, the consolidation adjustment needed at the date of acquisition to eliminate the dividend is: I. Dr Dividend payable $10 000 Cr Dividend receivable $10 000 II. Dr Dividend revenue $10 000 Cr Dividend declared $10 000 III. Dr Shares in subsidiary $10 000 Cr Dividend receivable $10 000 IV. Dr Dividend receivable $10 000 Cr Dividend payable $10 000

If a revaluation of the subsidiary's assets is performed on consolidation, the subsidiary's assets are carried into the consolidated statement of financial position at:

Turtles Ltd acquired 100% of Dove Ltd on 1 July 2021. At acquisition date, Dove Ltd had the following equity items: Retairyed earTings $\quad$$\quad$$\$ 120,000$ Share capital $\quad$$\quad$$\quad$$\quad$$\$ 200,000$ In the year following the acquisition, Dove Ltd paid a bonus share dividend of $30 000 out of pre-acquisition retained earnings. Which of the following consolidation adjustments is needed in the consolidation worksheet for 30 June 2022? I. Dr Shares in subsidiary $30 000 Cr Share capital $30 000 II. Dr Bonus dividend paid $30 000 Cr Share capital $30 000 III. Dr Share capital $30 000 Cr Bonus dividend paid $30 000 IV. Dr Retained earnings $30 000 Cr Share capital $30 000

On 1 January 2021, Brisbane Ltd acquired all the issued shares in Sydney Ltd. At that date, the plant of Sydney Ltd had a fair value of $20 000 more than its carrying amount and an estimated useful life of 5 years. Sydney Ltd depreciates the plant on a straight-line basis. The plant was still in the business at 30 June 2022. The business combination valuation entries in relation to the plant as at 30 June 2022 will include: I. Adjustments to the current depreciation expense II. Adjustments to retained earnings (opening balance) III. Transfers from business combination valuation reserve to retained earnings IV. Adjustments to the plant account to recognise the fair value adjustment at acquisition date

The effect of the pre-acquisition entry is to eliminate the 'Shares in subsidiary' asset and the:

Which of the following statements is incorrect?

The pre-acquisition entries are used to:

One year after acquisition date, acquired goodwill was regarded as having become impaired by $10 000. The appropriate consolidation adjustment in relation to the impairment will include the following line:

Oceania Limited acquired 100% of the share capital of Broadwater Limited. Broadwater had total shareholder's equity of $250 000. The book values of Broadwater Limited's assets were: buildings $150 000, machinery $90 000. The fair values of these assets were: buildings $180 000, machinery $100 000. The tax rate is 30%. The fair value of the identifiable net assets is:

Forrest Ltd acquired 100% of the share capital of Desert Ltd when the carrying value of Desert Ltd's equipment was $75 000. The fair value of the equipment on acquisition date was $90 000. The company tax rate was 30%. What is the amount of the business combination valuation reserve that must be recognised on consolidation?

Stairwell Limited acquired 100% of the share capital of Bannister Limited for $237 500. Bannister had total shareholder's equity of $200 000. The book values of Bannister Limited's assets were: buildings $100 000, machinery $120 000. The fair values of these assets were: buildings $120 000, machinery $125 000. The tax rate is 30%. The acquisition analysis will determine:

Papa Limited has two subsidiary entities, Mumma Limited and Junior Limited. Papa Limited owns 100% of the shares in both entities. Details of the cash accounts of each company are: Papa Limited $160 000, Mumma Limited $85 000, Junior Limited $12 500. The balance of the consolidated cash account of the Papa Limited group is:

In the case of a wholly owned subsidiary, if the fair value of the consideration transferred plus the fair value of the previously held interest is greater than the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary:

Before undertaking the consolidation process, it may be necessary to make the following adjustments in relation to the individual statements if the parent and the subsidiary do not use the same accounting policies for like transactions in similar circumstances:

On 1 July 2021, Pineapple Limited acquired all the issued shares of Melon Limited for $250 000 when the equity of Melon Limited consisted of: Bhare capital $\quad$$\quad$$\$ 130,000$ Retained earrings $\quad$ 120,000 The pre-acquisition entry at 1 July 2021 is: a. Shares in Melon Limited 250,000 Retained eamings 120,000 Share capital 130,000 b. Retained earnings 120,000 Share capital 130,000 Shares in Melon Limited 250,000 c. Retained earnings 130,000 Share capital 120,000 Shares in Melon Limited 250,000 d. Goodwill Dr 120,000 Share capital Dr 130,000 Shares in Melon Timited 250,000

Rose Ltd acquired on a cum div. basis all of shares in Petal Ltd for $140 000. At the date of acquisition, Trout Ltd had recorded a dividend payable of $40 000 and a total shareholders' equity of $110 000. Assuming all the identifiable assets in Petal Ltd were recorded at fair value at acquisition date, the consolidation worksheet entries will have to recognise: