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The following are summarized Balance Sheets as on March 31, 2020 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 fo

The following are summarized Balance Sheets as on March 31, 2020 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 fo

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The following are summarized Balance Sheets as on March 31, 2020

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

The following are summarized Balance Sheets as on March 31, 2020 H Ltd S Ltd H Ltd S Ltd Cash 200 20 Account Payable 300 40 Other current aset 500 40 Bank loan 400 20 Investment in S 4,000 100 Share Capital 150 Retained Earnings Ltd 2,000 Fixed Asset 3,000 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 ANSWER PART Goodwill and unrealized profit calculation Goodwill Fair value of consideration transferred Non controlling interest Fair value of identifiable net asset Share capital Retained Earnings Fair value adjustment Goodwill on acquisition date Unrealized profit Sales Cost of Sales Profit Unrealized profit
Transcribed Image Text:The following are summarized Balance Sheets as on March 31, 2020 H Ltd S Ltd H Ltd S Ltd Cash 200 20 Account Payable 300 40 Other current aset 500 40 Bank loan 400 20 Investment in S 4,000 100 Share Capital 150 Retained Earnings Ltd 2,000 Fixed Asset 3,000 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 ANSWER PART Goodwill and unrealized profit calculation Goodwill Fair value of consideration transferred Non controlling interest Fair value of identifiable net asset Share capital Retained Earnings Fair value adjustment Goodwill on acquisition date Unrealized profit Sales Cost of Sales Profit Unrealized profit
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