Spark
On 1 July 2008 Cortina Ltd acquired all the issued shares of Turin Ltd for $200 000. At acquisition date the recorded equity of Turin Ltd was: $ Share capital 150 000 Plant Maintenance Reserve 30 000 Retained earnings 87 500
At this date all identifiable net assets of Turin Ltd were recorded at fair value except for:
Carrying Amount Fair Value $ $ Inventory 39 000 51 000 Machinery (cost $250 000) 195 000 210 000
On 12 March 2008, a lawsuit claiming damages of $50 000 was lodged against Turin Ltd by one of its customers. A court hearing is scheduled for January 2009. Turin Ltd has not recognised any liability for damages arising from the lawsuit. On 1 July 2008, Cortina Ltd assessed potential damages at a fair value of $35 000
Events occurring subsequent to acquisition date.
Year ended 30 June 2009
Inventory on hand at 1 July 2008 was all sold prior to 30 June 2009.
The manufacturing plant’s useful life was re-assessed on acquisition date to six years.
A bonus dividend of $50 000 was issued by the directors of Turin Ltd on 6 June 2009. The dividend was funded from retained earnings on hand at 1 July 2009.
On 15 January 2009, the court found Turin Ltd guilty of negligence and awarded damages of $35 000 payable in two installments - $15 000 on 31 March 2009 and $20 000 on 31 March 2010. The first installment was duly made.
Year ended 30 June 2010
The manufacturing plant owned at 1 July 2008 was sold by Turin Ltd on 31 December 2010 for $80 000.
The second installment of damages was paid.
On 17 June 2011, the directors of Turin decided to transfer $15 000 from the plant and maintenance reserve back to retained earnings.
Required
1. Prepare the acquisition analysis at 1 July 2008.
2. Prepare the consolidation worksheet journal entries as at 1 July 2008.
3. Prepare the consolidation worksheet journal entries for the year ended 30 June 2009.
4. Prepare the consolidation worksheet journal entries for the year
At this date all identifiable net assets of Turin Ltd were recorded at fair value except for:
Carrying Amount Fair Value $ $ Inventory 39 000 51 000 Machinery (cost $250 000) 195 000 210 000
On 12 March 2008, a lawsuit claiming damages of $50 000 was lodged against Turin Ltd by one of its customers. A court hearing is scheduled for January 2009. Turin Ltd has not recognised any liability for damages arising from the lawsuit. On 1 July 2008, Cortina Ltd assessed potential damages at a fair value of $35 000
Events occurring subsequent to acquisition date.
Year ended 30 June 2009
Inventory on hand at 1 July 2008 was all sold prior to 30 June 2009.
The manufacturing plant’s useful life was re-assessed on acquisition date to six years.
A bonus dividend of $50 000 was issued by the directors of Turin Ltd on 6 June 2009. The dividend was funded from retained earnings on hand at 1 July 2009.
On 15 January 2009, the court found Turin Ltd guilty of negligence and awarded damages of $35 000 payable in two installments - $15 000 on 31 March 2009 and $20 000 on 31 March 2010. The first installment was duly made.
Year ended 30 June 2010
The manufacturing plant owned at 1 July 2008 was sold by Turin Ltd on 31 December 2010 for $80 000.
The second installment of damages was paid.
On 17 June 2011, the directors of Turin decided to transfer $15 000 from the plant and maintenance reserve back to retained earnings.
Required
1. Prepare the acquisition analysis at 1 July 2008.
2. Prepare the consolidation worksheet journal entries as at 1 July 2008.
3. Prepare the consolidation worksheet journal entries for the year ended 30 June 2009.
4. Prepare the consolidation worksheet journal entries for the year