H Ltd S Ltd H Ltd SLtd Cash Other current 200 20 Account Payable 300 40 aset 500 40 Bank loan 400 20 Investment in S Ltd 2,000 3,000 Share Capital 150 Retained Earnings 4,000 100 Fixed Asset 1,000 50 TOTAL ASSET 5700 210 TOTAL LIABILITIES AND EQUITIES 5700 210 H. Ltd. acquired 80% shares in S Ltd. on October 1, 2019 for $ 2,000. At the date of acquisition all the assets and liabilities of S Ltd were reflected at fair value • The Retained earnings of S Ltd. on April 1, 2019 was $ 200 H Ltd measures the Non Controlling Interest at its proportionate share of the acquiree's net identifiable assets. • S Ltd transferred goods to H Ltd at a transfer price of $ 300. The sales policy of H Ltd is to add 50 % of mark up to its cost. Two-thirds remained in inventory at the year end. Required : Calculate goodwill at the date of acquisition and unrealized profit for holding company

H Ltd S Ltd H Ltd SLtd Cash Other current 200 20 Account Payable 300 40 aset 500 40 Bank loan 400 20 Investment in S Ltd 2,000 3,000 Share Capital 150 Retained Earnings 4,000 100 Fixed Asset 1,000 50 TOTAL ASSET 5700 210 TOTAL LIABILITIES AND EQUITIES 5700 210 H. Ltd. acquired 80% shares in S Ltd. on October 1, 2019 for $ 2,000. At the date of acquisition all the assets and liabilities of S Ltd were reflected at fair value • The Retained earnings of S Ltd. on April 1, 2019 was $ 200 H Ltd measures the Non Controlling Interest at its proportionate share of the acquiree's net identifiable assets. • S Ltd transferred goods to H Ltd at a transfer price of $ 300. The sales policy of H Ltd is to add 50 % of mark up to its cost. Two-thirds remained in inventory at the year end. Required : Calculate goodwill at the date of acquisition and unrealized profit for holding company

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 24E

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