Corporate Accounting: Business Combination, Liquidation, Unrealized Profits and Residual Value

Project Report: Corporate Accounting

Que 1:
B) $ 18,000
Que 2:
D) General purpose financial statements
Que 3:
C) In the consolidation working papers
Que 4:
D) Plant and equipment
Que 5:
C) There is a legal right of set-off and it is permitted by a standard
Que 6:
C) 21000
Que 7:
C) Materiality
Que 8:
A) Asset revaluation surplus
Que 9:
B) Prepare and issue accounting standards
Que 10:
D) Consolidated financial statements

Que 1)
Net fair value of identifiable assets and liabilities of
White limited
100000+1360000 (Equity)
(55000) (Inventory)
(260000) (Land) $ 2,045,000
Consideration amount $ 2,700,000
Goodwill amount $ 655,000
Journal Entries
Deferred tax assets 55000
Inventory 55000
Deferred tax assets 260000
Land 260000
Accumulated impairment losses 20000
Goodwill 20000
Que 2)
Journal Entries
Management fee revenue of Wheel ltd 18000
Management fee revenue of Spoke Ltd 18000
loan from Wheel limited 13000
Loan to Spoke limited 13000
Business combination valuation reserve 5000
Deferred tax liabilities 1500
Inventory 3500
Business combination valuation reserve 2000
Deferred tax liabilities 600
Assets 1400