Exam 12: Completing the Balance Sheet

The directors of Behrens Ltd decided to issue 300 000 ordinary shares at $1 each. 25 cents per share was payable on application, 25 cents per share on allotment and the balance through two equal calls. Applications were received for 250 000 shares, which were duly issued and allotment money was paid in full. The journal entries to record the allotment would include a:

Gargantua Ltd paid $1 000 000 for 75 per cent of the voting shares of Dwarf Ltd, and evaluated Dwarf's assets to be worth $1 500 000 and its liabilities $300 000. What was the goodwill on consolidation at the date of acquisition?

Which of the following statements about a bonus issue is NOT true?

Which of the following statements about the general reserve account is NOT true?

What percentage of shares, as a general rule, are held by an investor for it to be presumed that the investor has significant influence over the company, unless there is evidence to the contrary?

XYZ Limited paid $2 million for 100 per cent of the voting shares of ABC Limited and determined the assets to be worth $3 million and the liabilities $800 000. What was the goodwill on consolidation at the date of acquisition?

Investments appear on the balance sheet under the heading of:

On 1 January 2016, Yu Ltd acquired 100 000 shares (30 per cent of the voting interest) in Ping Ltd for $900 000 cash. On 30 June 2016, Ping Ltd announced its earnings per share for the first six months of 2016 at $2.00 per share. On 20 November, Ping Ltd paid dividends to shareholders at $1.20 per share. On 31 December 2016, Ping Ltd announced its earnings per share for 2016 at $3.50 per share (i.e., $1.50 additional since 30 June). If Yu Ltd used the cost method, what would have been the impact of Ping Ltd's 30 June 2016 earnings announcement?

An issue of 50 000 shares at $3 required $2.20 per share to be paid at the time of application. On allotment, another $0.30 was due and a further $0.50 when determined by the board of directors. The application money in respect of the 50 000 shares was received on 8 July. On 26 July, the shares were issued with the amount due on allotment received on 15 August. The remaining $0.50 was called up on 20 September and received on 10 October. The journal entry to record the amount due on application would include:

LMN Ltd declared an interim dividend on 12 February 2016 of 5 cents per share (500 000 issued shares) and paid it on 3 March 2016. The journal entry on 12 February 2016 would include:

Which of the following statements about a 2:1 share split is NOT true?

XYZ buys a 24 per cent share in ABC for $80m. ABC's total net profit is $50m and it pays $4m in dividends to XYZ. Using the equity method, the value of the investment in ABC would be recorded at year-end as:

Springtown Ltd issued 10 000 ordinary shares for $2.50 each, payable $1 on application, 50 cents on allotment and $1 in calls as required. The journal entries to record the allotment of 10 000 shares would include a:

On 1 January 2016, Sky-High Ltd acquired 100 000 shares (30 per cent of the voting interest) in Down Ltd for $600 000 cash. On 30 June 2016, Down Ltd announced its earnings per share for the first six months of 2016 at $1.50 per share. On 20 November, Down Ltd paid dividends to shareholders at $0.90 per share. On 31 December 2016, Down Ltd announced its earnings per share for 2016 at $2.80 per share (i.e., $1.30 additional since 30 June). If Sky-High Ltd used the equity basis, what revenue would it record for the year ended 31 December 2016 in respect of its investment in Down Ltd?

An issue of 50 000 shares at $3 required $2.20 per share to be paid at the time of application. On allotment, another $0.30 was due and a further $0.50 when determined by the board of directors. The application money in respect of the 50 000 shares was received on 8 July. On 26 July, the shares were issued with the amount due on allotment received on 15 August. The remaining $0.50 was called up on 20 September and received on 10 October. The journal entry to record the cash received on application would include:

An issue of 50 000 shares at $3 required $2.20 per share to be paid at the time of application. On allotment, another $0.30 was due and a further $0.50 when determined by the board of directors. The application money in respect of the 50 000 shares was received on 8 July. On 26 July, the shares were issued with the amount due on allotment received on 15 August. The remaining $0.50 was called up on 20 September and received on 10 October. What was the balance of share capital at 11 October?

Which of the following is NOT omitted from the consolidated accounts?

On 1 January 2016, Yu Ltd acquired 100 000 shares (30 per cent of the voting interest) in Ping Ltd for $900 000 cash. On 30 June 2016, Ping Ltd announced its earnings per share for the first six months of 2016 at $2.00 per share. On 20 November, Ping Ltd paid dividends to shareholders at $1.20 per share. On 31 December 2016, Ping Ltd announced its earnings per share for 2016 at $3.50 per share (i.e., $1.50 additional since 30 June). If Yu Ltd used the cost method, what dividend revenue would it record for the year ended 31 December 2016 in respect of its investment in Ping Ltd?

Alby Ltd paid $1 800 000 for 80 per cent of the voting shares of Bunter Ltd and evaluated Bunter's assets to be worth $3 000 000 and its liabilities $800 000. What was the goodwill on consolidation at date of acquisition?

Which of the following statements about bonus issues is NOT true?