Exam 18: Acquisition Method Application After Control Date

Wholly owned Subsidiary has the following balances at control date 20X1: Capital \ 500000 Asset revaluation reserve \ 200000 Retained profits \ 100000 During 20X2 Subsidiary generates $100 000 profits and revalues plant downwards by $375 000.The 20X2 profit is before any impact of the downward asset revaluation.The asset revaluation reserve all relates to previous revaluation of plant. During 20X3 Subsidiary incurs $50 000 of losses. The amount of accumulated losses included in the consolidation for 20X3 (that is, not eliminated) is $125 000.

Rose Ltd acquired all the equity of Jeannie Ltd on 1 July 20X3.At that time the fair value/financial position of Jeannie was as follows: Capital \ 500000 Reserves \ 100000 Retained profits \ 150000 Liabilities \ 50000 Rose paid $500 000 for the shares in Jeannie. In the 20X3-4 financial year, Jeannie made $75 000 in profits. Which of the following is the correct substitution elimination entry as at 30 June 20X4?

Angels Ltd acquired 100% of ACDC Ltd on 1 July 20X0 for $2 000 000, when the equity of ACDC Ltd comprised paid up capital of $1 400 000 and retained profits of $300 000.All ACDC Ltd's balance sheet was reported at fair value at acquisition date.During the year ended 30 June 20X1 ACDC Ltd declared and paid a total dividend of $100 000 out of pre-acquisition profits.What is the elimination entry for these transactions for the year ended 30 June 20X1? Assume AASB 127.38A was not operational during this period.

Rose Ltd acquired all the equity of Jeannie Ltd on 1 July 20X3.At that time the fair value/financial position of Jeannie was as follows: Capital \ 500000 Reserves \ 100000 Retained profits \ 150000 Liabilities \ 50000 Rose paid $850 000 for the shares in Jeannie. In the 20X3-4 financial year, Jeannie made $75 000 in profits and recorded a goodwill impairment of $10 000. Which of the following is the correct set of consolidation entries for June 30 20X4?

Wholly owned Subsidiary has the following balances at control date 20X1: Capital \ 500000 Asset revaluation reserve \ 200000 Retained profits \ 100000 Parent paid $900 000 for the shares of Subsidiary.The tax rate is 30%. In the consolidation for 20X1, recognition of goodwill generates a deferred tax asset of $30 000.

Angels Ltd acquired 100% of ACDC Ltd on 1 July 20X0 for $2 000 000, when the equity of ACDC Ltd comprised paid up capital of $1 400 000 and retained profits of $300 000.All ACDC Ltd's balance sheet was reported at fair value at acquisition date.During the year ended 30 June 20X1 ACDC Ltd declared and paid a total dividend of $100 000 out of pre-acquisition profits.What is the elimination entry for these transactions for the year ended 30 June 20X5? (assume no other transactions).Assume AASB 127.38A was operational during this period.

Subsidiary has internally generated an intangible asset that it does not recognise in its own account balances and financial statements.Parent assesses the value of the intangible at $500 000.The correct consolidation data adjustment for the intangible is: Dr.Intangible $\quad$$\quad$$\quad$$\quad$ $500 000 Cr.Asset revaluation reserve $\quad$$\quad$$\quad$ $500 000

Rose Ltd acquired all the equity of Jeannie Ltd on 1 July 20X3.At that time the fair value/financial position of Jeannie was as follows: Capital \ 500000 Reserves \ 100000 Retained profits \ 150000 Liabilities \ 50000 Rose paid $850 000 for the shares in Jeannie. In the 20X3-4 financial year, Jeannie made $75 000 in profits. Which of the following is the correct substitution elimination entry as at 30 June 20X4?