PKT Ltd acquired 80% of the ordinary shares of CF Ltd. The net assets were fairly valued on 1 January 2021 except for machinery that were undervalued by R550 000. The machine was purchased on 1 January 2020 for R1 250 000 and had a useful life of 5 years. No adjustments at acquisition for the above matter. Prepare the journal entries (with narrations) for the year ended 31 December 2022. Assume a tax rate of 30%

PKT Ltd acquired 80% of the ordinary shares of CF Ltd. The net assets were fairly valued on 1 January 2021 except for machinery that were undervalued by R550 000. The machine was purchased on 1 January 2020 for R1 250 000 and had a useful life of 5 years. No adjustments at acquisition for the above matter. Prepare the journal entries (with narrations) for the year ended 31 December 2022. Assume a tax rate of 30%

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 8RE

See similar textbooks

Similar questions

1. PKT Ltd acquired 80% of the ordinary shares of CF Ltd. The net assets were fairly valued on 1 January 2021 except for machinery that were undervalued by R550 000. The machine was purchased on 1 January 2020 for R1 250 000 and had a useful life of 5 years. No adjustments at acquisition for the above matter. Required: Prepare the journal entries (with narrations) for the year ended 31 December 2022. Assume a tax Rate of 30% 1.2. PKT Ltd wanted to achieve a 25% GP for each sale completed. Inventory sales between AB and CF Ltd amounted to R1875 000 for the year ended 31 December 2022. Inventory on hand in CF Ltd previously Purchased from PKT Ltd: R620 000 (31 December 2022) R750 000 (31 December 2021) Required: Prepare the journal entries (with narrations) for the year ended 31 December 2022. Assume a tax rate of 30%.
PKT Ltd acquired 80% of the ordinary shares of CF Ltd. The net assets were fairly valued on 1 January 2021 except for machinery that were undervalued by R 550 000. The machine was purchased on 1 January 2020 for R1 250 000 and had a useful life of 5 years. No adjustments at acquisition for the above matter. Prepare the journal entries (with narrations) for the year ended 31 December 2022. Assume a tax rate of 30%
. PKT Ltd acquired 80% of the ordinary shares of CF Ltd. The net assets were fairly valued on 1January 2021 except for machinery that were undervalued by R550 000. The machine was purchased on 1January 2020 for R1 250 000 and had a useful life of 5 years. No adjustments at acquisition for the abovematter. Prepare the journal entries (with narrations) for the year ended 31 December 2022. Assume a taxrate of 30%
Question:The following is the extract from trial balance of G Limited, subsidiary of Y Limited for the year ended 31 December 2021. Dr CrInventory on hand: 31/12/2020 50 000 Sales 1025000Purchases 350 000 Depreciation 25 000 Rent income 40 000Dividend paid 11 000 Other expenses 300 000 Income tax expense 145 000 Additional information: 1. Y Limited acquired its interest in G limited on the 1 st May 2021. 2.The average monthly sales of G Limited accrued evenly throughout the year.…
Ryan Ltd holds a 75% interest in Tully Ltd. On 30 June 2021 Tully Ltd transferred a depreciable non-current asset to Ryan Ltd at a profit of $15 000. Ryan Ltd determined that the remaining useful life of the asset at the date of transfer to Ryan Ltd was 5 years and the tax rate is 30%. The impact of the above transaction on the NCI share of profit at 30 June 2021 is: a. a decrease of $2 625 b. an increase of $3 750 c. an increase of $2 100 d. a decrease of $3 225 e. None of the above Please dont provide answer in image format thannk you
On 1st July, 2018 Murray Ltd acquired 70% of the share capital of Darling Ltd for $100,000,000. Equity of Darling Ltd at acquisition date was: Share Capital $ 60,000,000 General Reserve $ 20,000,000 Retained Earnings $ 10,000,000 All assets and liabilities of Darling Ltd were recorded at fair value on acquisition. Ignore Tax effects. Required: Complete the worksheet below using the partial goodwill method with the NCI measured at the proportionate share of the acquiree’s identifiable net assets. Elimination of Investment in Darling Ltd Darling Ltd (S) $,000 Murray Ltd (70% of Darling) (P) $,000 30% NCI $,000 Fair Value of consideration transferred Less: FV of identifiable assets acquired & liabilities assumed Share capital on acquisition date 60,000 General…
On 1 July 2022, Dean Ltd acquired the remaining 80% of the issued shares of Lewis Ltd for shares in Dean Ltd with a fair value of $1 000 000. At that date, the financial statements of Lewis Ltd showed the following information. All the assets and liabilities of Lewis Ltd were recorded at amounts equal to their fair values at the acquisition date, except some equipment recorded at $50 000 below its fair value with a related accumulated depreciation of $80 000. Assume the equipment has not been revalued in the subsidiaries accounts. Also, Dean Ltd identified at acquisition date a contingent liability related to a lawsuit where Lewis Ltd was sued by a former supplier and attached a fair value of $40 000 to that liability. The previous held interest by Dean Ltd in Lewis Ltd (ie 20% of the issued shares) was recognised by in Dean Ltd.’s accounts at the fair value at acquisition date of $250 000. Dean Ltd incurred $15 000 in acquisition related costs including $10 000 in share issue costs.…
MEME Corporation’s Retained Earnings at December 31, 2021 amounted to P2,000,000. On that date, the corporation declared and distributed its investment property which was acquired at a historical cost P300,000 and has a fair market value of P450,000 on December 31, 2021. On the date of declaration and distribution, by what amount should Retained Earnings be charged? A. P300,000 B. P150,000 C. None D. P450,000
On 1 July 2019, Brad Ltd acquired all of the assets and liabilities of Pitt Ltd. In exchange for these assets and liabilities, Brad Ltd issued 100 000 shares that at date of issue had a fair value of $5.20 per share. Costs of issuing these shares amounted to $1000. Legal costs associated with the acquisition of Pitt Ltd amounted to $1200. The asset and liabilities of Pitt Ltd at 1 July 2019 were as follows: Carrying amount Fair value Assets $ 2000 10000 64 000 320 000 $ 2000 10000 Cash Accounts receivable 68 000 232 000 Inventories Equipment Accumulated depreciation – equipment (96 000) 240 000 Patents 280 000 Liabilities (16 000) (64 000) Accounts payable (16000) (64 000) Debentures Required (a) Prepare the acquisition analysis at 1 July 2019 for the acquisition of Pitt Ltd by Brad Ltd.
MEME Corporation's Retained Earnings at December 31, 2021 amounted to P2,000,000 On that date, the corporation declared and distributed its investment property which was acquired at a historical cost P300,000 and has a fair market value of P450,000 on December 31, 2021 On the date of declaration and distribution, by what amount should Retained Earnings be charged?
On January 2, 2020, Kent Corp. paid 1,600,000 for the purchase of 40% of the ordinary shares of Kara Company. The statement of financial position of Kara at the date of acquisition shows the following information:Assets subject to depreciation (remaining useful life is 8 years) 2,400,000Assets not subject to depreciation 800,000Liabilties 400,000Both book value and fair value are the same for assets not subject to depreciation and liabilities. The fair market value of Karas assets subject to depreciation is 2,720,000. Kara depreciates its assets using the straight-line method. Karas intangibles are amortized over a 20-year period. Net income for the year ended December 31, 2020, is 640,000. It declares and pays dividends of 500,000 in 2020.What amount of the investment cost is attributable to goodwill? a. 480,000 b. 352,000 c. 608,000 d. 128,000
On July 1, 2020, Blue George Company purchased 25% interest of Pink Conrad for P150,000. Blue George incurred transaction cost equal to 5% on the transaction price. On October 1, 2020, Pink Conrad declared dividends of P80,000. At the end of 2020, Pink Conrad reported net income of P200,000. On January 1, 2021, the fair values of Pink Conrad's net assets were as follows:Current Assets - P100,000;Equipment - P150,000;Patent – P120,000;Land - P50,000;Buildings - P300,000; andLiabilities - P80,000. On January 1, 2021, Blue George Company purchased 50% interest of the Pink Conrad Company by issuing 100,000 shares of its P1 par value stock when the fair value of the stock was P6.20. Pink Conrad paid for the legal fees of P10,000 and securities SEC registration of P20,000 which was reimbursed by Blue George. The Patent of Pink Conrad refers to the technology purchased by Pink Conrad from Blue George years ago. Blue George had an outstanding unearned revenue related to the Patent amounting to…