On 1 July 2013 Douglas Ltd acquired all of the share capital (cum div)of Nanette Limited for a consideration of $500,000

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On 1 July 2013 Douglas Ltd acquired all of the share capital
(cum div)of Nanette Limited for a consideration of $500,000 cash
and a brand that was held in their accounts
at a book value of $10,000 but now had a fair value of $34,000. At
the date of acquisition Nanette's accounts showed a dividend
payable of $10,000.
At that date all the identifiable assets and liabilities were
recorded at fair value with the exception of:
The inventory was all sold by 30/6/14. The remaining useful life
of the plant is 5 years. The accounts receivable were collected by
30/6/14 for $14,000
The land was sold on 30/12/16 for $32000. The plant was on hand
still at 30/6/17.
At the date of acquisition the equity of Nanette Ltd consisted
of:
Share Capital - $380,000
General Reserve - $70,000
Retained Earnings - $62,000
Information from the trial balances of Nanette Ltd and Douglas
Ltd at 30 June 2017 is presented overleaf.
Additional Information
1. On 1 Jan 2017 Douglas Ltd sold inventory to Nanette Ltd
costing $60,000 for $80,000. Half of this inventory was sold to
outside parties for $30,000 by 30/6/17.
2. On 1 Jan 2016 Nanette Ltd sold inventory costing $9000 to
Douglas Ltd for $12,000. Douglas Ltd treats the item as equipment
and depreciates it at 10% per annum.
3.On 1 July 2016 Nanette sold plant to Douglas for $12,000. The
plant had cost Nanette $10,000 on 1 July 2014 and it was being
depreciated at 10% per annum. Douglas regards the plant as
inventory. The inventory was all sold by 30th July 2016.
4. At 1 July 2016 Douglas Ltd held inventory that it had purchased
from Nanette Ltd on 1 June
2016 at a profit of $7000. All inventory was sold by 30 June
2017
5. Douglas Ltd accrues dividends from Nanette Ltd once they are
declared.
6. Nanette Ltd has earned $1200 in interest revenue in the 2017
financial year from Douglas Ltd. 7. Nanette Ltd has earned $4800 in
service revenue in the 2017 financial year from Douglas Ltd. 8.
Assume a tax rate of 30%.
Required:
A. Prepare the acquisition analysis at 1 July 2013.
B. Prepare the BCVR and pre-acquisition journal entries at 1 July
2013.
C. Prepare the BCVR and pre-acquisition journal entries at 30 June
2017.
D. Prepare the consolidation worksheet journal entries to eliminate
the effects of inter-entity transactions as at 30 June 2017.
E. Prepare the consolidation worksheet for the preparation of the
consolidated financial statements for the period ended 30 June
2017
F. Prepare the consolidated statement of profit or loss and other
comprehensive income, the consolidated balance sheet and the
consolidated statement of changes in equity for the period ended 30
June 2017.

On 1 July 2013 Douglas Ltd Acquired All Of The Share Capital Cum Div Of Nanette Limited For A Consideration Of 500 000 1 (103.38 KiB) Viewed 51 times

Nanette Ltd DR CR 932,500 Trial Balances As at 30 June 2017 Douglas Ltd DR CR 1,192,500 888,000 61,000 5,200 3,500 7,000 4,000 676,000 32,000 4,800 4,800 1,200 9,000 4,800 1,200 16,000 10,000 5,000 7,000 97,120 118,480 100,820 70,280 10,000 12,000 7,000 9,000 Sales Revenue Cost of Sales Wages and Salaries е Depreciation Expense Service Expense Interest Expense Other Expenses . Gain on Sale of Non Current Assets Service Revenue de Interest Revenue hence vu Dividend Revenue Income tax expense Retained Earnings 1/7/16 Dividend Paid Dividend Declared Share Capital General Reserve Other Equity 1/7/16 Gains on Financial Assets (OCI) Loan Payable to Douglas Ltd Deferred Tax Liability Dividend Payable Shares in Nanette Ltd Cash Inventories Other Current Assets Dividend Receivable Loan receivable from Nanette Ltd Financial Assets Plant and Equipment Acc. Depreciation Plant Land 500,000 146,000 4,000 1,000 380,000 70,000 12,000 6,000 16,000 30,000 9,000 52,000 12,000 147,500 36,000 300,000 524,000 86,000 169,500 11,000 9,000 16,000 15,000 52,000 68,000 28,000 10,000 14,000 70,000 2,040,320 120,000 1,561,780 2,040,320 1,561,780