Spark

Satisfactory Essays
Topics: 2009, 2008, 1920
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

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