90.2K

Verified Solution

Link Copied!

i need to check if my calculation is correct.

$1$

st question. Prepare the acquisition analysis at the date of acquisition.

$$

$2$

nd question Record the consolidated journal entries necessary to prepare consolidated accounts for the year ending $30/06/2024$

additional info

$($a$)$ At date of acquisition, all identifiable net assets of Minim Ltd were recorded at fair value, with the exception of a item of Plant in the books of Minim Ltd$.$

The item of Plant had cost of $$1,219,920,$ and an accumulated depreciation of $$244,010.$ The management of Breve Ltd believed the item of Plant had a

fair value of $$1,366,274$ and a remaining useful life of $5$ years.

$($b$)$ The directors apply the impairment test for goodwill annually. As at $30/06/2024,$ the cumulative goodwill impairment write$-$downs for prior years totalled

$$1,243,000.$ During the current year, the goodwill has further been impaired by another $$18,645.$

$($c$)$ An item of Equipment owned by Minim Ltd was sold to Breve Ltd on $01/01/2021$ for $$429,400.$ The cost of the Equipment was $$375,360$ and its

accumulated depreciation was $$75,080$ at the time of trasnfer. Breve Ltd estimated this item had an annual depreciation rate of $10\%$ with no residual

value.

$($d$)$ The opening inventory of Breve Ltd includes unrealised profit of $$492,000$ on inventory transferred from Minim Ltd during the prior financial year. All of

this inventory was sold by Breve Ltd to parties external to the Group by $30/06/2024.$

$($e$)$ During the financial year ending on $30/06/2024,$ Breve Ltd purchased inventory from Minim Ltd for $$2,134,000.$ This inventory had previously cost

Minim Ltd $$853,000.$ By $30/06/2024,55\%$ of this inventory was sold to outsiders by Breve Ltd$.$

$($f$)$ Minim Ltd borrowed a loan from Breve Ltd amounting to $$703,000$ at the start of the current period. On $30/06/2024,$ Minim Ltd paid the annual interest

for the intra group loan at a rate of $8\mathrm{.}50\%$

$($e$)$ During the current year, Breve Ltd paid Arina Ltd$,$ an external party for management fees expense amouning to $$2,000$

$($i$)$ The tax rate is:

$30\%.$

facts below : Part A $-$ Consolidation Question

On $01/07/2020,$ Breve Ltd acquired $100\%$ of the issued shares of Minim Ltd for:

The accounts of the two companies appear as at $30/06/2024$ are as follows:

Answer & Explanation Solved by verified expert

See Answer