This website uses cookies to ensure you have the best experience. Learn more

Accounting 260 Essay

1259 words - 6 pages

ACCT2006 CORPORATE ACCOUNTING
BUSINESS COMBINATIONS
QUIZ QUESTIONS and SOLUTIONS

1. On 1 December 2013, Grapefruit Ltd took over the operation of Lime Ltd. At that date the assets and liabilities of Lime Ltd were:
Carrying Amount Fair Value
Cash 20 000 20 000
Receivables 40 000 38 000
Inventory 27 000 42 000
Property, Plant and Equipment 135 000 157 000
Accounts Payable (37 000) (39 000)
Employee Entitlements (41 000) (46 000)

Grapefruit Ltd acquired all of the assets except cash plus an unrecorded trademark owned by Lime Ltd which Grapefruit Ltd estimated to be worth $30 000 at acquisition date. In exchange for these assets Grapefruit gave the ...view middle of the document...

Define control. (1 Mark)

7. On 1 July 2013 Cumquat Ltd acquired the operating division of Mandarin Ltd. At that date the assets and liabilities of the operating division were:
$
Receivables 25 000
Inventory 17 000
Land 160 000
Plant and Equipment (net) 82 000
Accounts Payable (36 500)
Loan Payable (40 000)

All items are recorded at fair value with the exception of inventory ($23 000), land ($180 000) and loan payable ($43 000). In exchange, Cumquat Ltd gave Mandarin Ltd 50 000 Cumquat Ltd shares with a fair value of $2.50 each, a portfolio of listed shares (fair value $51 000; carrying value $40 000) and $59 000 cash. Costs of issuing the new shares were $900.

Required
Prepare the acquisition analysis. (3 Marks)

8. Name two types of business combination which are not covered by the provisions of AASB 3. (2 Marks)

9. Why is the concept of control essential to accounting for business combinations? (1 Mark)

10. On 1 April 2013, Lemon Ltd acquired all of the issued shares of Orange Ltd. At this date, the share capital of Orange Ltd consisted of 70 000 ordinary shares issued at $2.60 each. Under the terms of the acquisition Lemon Ltd is to give each shareholder of Orange Ltd for each five (5) Orange Ltd shares held two (2) Lemon Ltd shares and $1.50 cash. The fair value of a Lemon Ltd share is $3.35. It will cost Lemon Ltd $ 750 to issue the new shares.

Required
Calculate the cost of the business combination, show all workings. (2 Marks)

11. What steps should an accountant take immediately after calculating that a gain on bargain purchase has arisen from a business combination transaction? (2 Marks)

12. What is the key difference between identifiable assets and goodwill? (1 Mark)

13. On 1 July 2013 Cumquat Ltd acquired the operating division of Mandarin Ltd. At that date the assets and liabilities of the operating division were:
$
Receivables 25 000
Inventory 17 000
Land 160 000
Plant and Equipment (net) 82 000
Accounts Payable (36 500)
Loan Payable (40 000)

All items are recorded at fair value with the exception of inventory ($23 000), land ($180 000) and loan payable ($43 000). In exchange, Cumquat Ltd gave Mandarin Ltd 50 000 Cumquat Ltd shares with a fair value of $2.50 each, a portfolio of listed shares (fair value $51 000; carrying value $40 000) and $59 000 cash. Costs of issuing the new shares were $900.

Required
Prepare the journal entries to record the above acquisition. (5 marks)

14. What is a gain on bargain purchase and how is it accounted for? (1 Mark)

15. On 1 January 2013 Mango Ltd took over the operations of Lychee Ltd and recorded acquired goodwill worth $15 000. On 13 February 2013 the accountant was advised that the...

Other Papers Like Accounting 260

Standard Accountin Auditing Essay

1973 words - 8 pages g The Malaysian Institute of Certified Public Accountants (Institut Akauntan Awam Bertauliah Malaysia) (3246-U) January 15, 2008 Circular No: Stu/02/01/08 To: ALL REGISTERED STUDENTS MICPA EXAMINATION ACCOUNTING AND AUDITING STANDARDS The Institute’s Examination Regulations and Syllabus state that: (a) Questions involving knowledge of accounting and auditing should be answered in accordance with the requirements of approved accounting

Financial Statement Restatment Paper

553 words - 3 pages Financial Statement Restatement Paper ***** ****** ACC/537 January 13, 2014 Financial Statement Restatement Paper MicroStrategy, Inc. went public in June 2008. It is a software company that had been identified as, “a successful, growing company with positive net income” (Krishnan & Mintz, 2007). Like many managers, the managers at MicroStrategy, Inc. wanted to make a quick profit by using aggressive accounting techniques that

Accounting

1683 words - 7 pages , Accounting and Business Research ,Vol.38. NO.3 2008 International Accounting policy forum pp. 171-190 Douglas J.Skinner ,2008, Accounting and Business Research ,Vol.38. NO.3 2008 International Accounting policy forum pp. 215-216 Jed Wrigley ,2008, Accounting and Business Research ,Vol.38. NO.3 2008 International Accounting policy forum pp. 257-260 Student NO. 9430293 Name : Shu Wang

Accounting

764 words - 4 pages Christopher Bonner BUS630: Managerial Accounting (NAH1313A) Instructor; Brian Shaw Middlehurst House Analysis: Case 9A in Chapter 9 Middlehurst House Analysis: Case 9A in Chapter 9 As we are familiar with the case, we feel that two very important issues have not been addressed which in sufficient detail, given that it may influence the profitability of the business venture. These are General: (1) The allocation of capital by

Engineering Management Student Learning Outcome Assessment Report

1637 words - 7 pages analyzes quantitative charts and graphs and incorporates information into managerial decision-making systems. | 266/299 | 3 | | | a.2 | Identifies and uses appropriate modeling tools in the solution of quantitative problems. | 251/253 | 3 | | | a.3 | Applies quantitative models to specific problem categories and classifications. | 253 | 3 | | | a.4 | Uses a firm’s accounting system in making management decisions. | 147 | 3 | | | a

Fi504 Mid Term

859 words - 4 pages 9. Know about revenue recognition principle, matching principle, and time-period assumption 10. Know the computation net income under accrual accounting (revenues - expenses) 11. Know the meaning and purpose of adjusting entries, and the different types of adjusting entries 12. Know the difference between periodic and perpetual inventory systems 13. Know how to calculate net cost of purchases when terms of payment look like, for example, 3

Intangible Assets Quiz Financial Accounting

973 words - 4 pages ADVANCED FINANCIAL ACCOUNTING 260 INTANGIBLE ASSETS QUIZ QUESTIONS 1. List two assets which would not meet the ‘identifiable’ aspect of the definition of an intangible asset. (2 Marks) Customer loyalty Relationship with suppliers 2. Intangible assets acquired via a separate acquisition are always recognised. Why? (2 Marks) The price an entity pays to acquire an intangible asset will reflect expectations about future economic

Hollinger Case

966 words - 4 pages management in connection with the auditor’s appointment or retention Establish an understanding of the terms of the audit Obtaining Information and Communicating the Audit Strategy Obtaining information relevant to the audit Overall audit strategy, timing of the audit, and significant risks Results of the Audit Accounting policies and practices, estimates, and significant unusual transactions Auditor’s evaluation of the quality of the

Air France Part A

1250 words - 5 pages liability for these miles. It is listed as “Frequent flyer programs” for €806 million. C. AF’s accounting approach under IFRS is consistent with how U.S. GAAP accounts for multiple deliverable contracts. Per the Spiceland text, page 258-260, the revenue associated must be deferred and recognized separately from the revenue associated with what is being earned. In the case of AF it would be the revenue from the AF miles would be deferred and

Harvard Case

4210 words - 17 pages 4011 APRIL 7, 2009 CRAIG CHAPMAN Biovail Corporation: Revenue Recognition and FOB Sales Accounting Background Late on October 9, 2003, David Maris, an analyst at Banc of America Securities (BAS), was trying to interpret the shocking events of the previous few days and finish the write-up of his first report on the Canadian pharmaceutical firm, Biovail Corporation. Maris didn’t like what he saw at the company, but he never liked

Gendermanagement

2343 words - 10 pages . Leadership and Organization Development Journal, 28, 531-551. Sudbrack, B., & Trombley, S. (2007). Lost: A survival guide to leadership theory. Advances in Developing Human Resources, 9(2), 251-260. Trehan, K. (2007). Psychodynamic and critical perspectives on leadership development. Advances in Developing Human Resources, 9(1), 72-82. West, C. and Zimmerman, D.H. (2009), “Accounting for doing gender”, Gender & Society, Vol. 23 No. 1

Related Essays

Advanced Financial Accounting 260 Essay

1252 words - 6 pages ADVANCED FINANCIAL ACCOUNTING 260 IMPAIRMENT QUIZ QUESTIONS 1. When should an entity conduct an impairment test? (2 Marks) The following assets require an impairment test every year: • Intangible assets with indefinite useful lives • Intangible assets not yet available for use • Goodwill acquired in a business combination The impairment test is undertaken when there is indication that an asset may be

Accural Method Essay

419 words - 2 pages Michael Simonds HSM/260 Accrual Method The Accrual Method is a major accounting method that recognizes revenues and expenses at the time physical cash is actually received or paid out. This contrasts to the other major accounting method, accrual accounting, which requires income to be recognized in a company's books at the time the revenue is earned (but not necessarily received) and records expenses when liabilities are incurred (but

Acc 225 Week 7 Checkpoint Essay

1255 words - 6 pages CheckPoint: Accounting Information Systems and Special Journals QS 7-1 and 7-3 and Exercises 7-1, 7-4, 7-7, and 7-10 QS 7-1 Place the letter of each system principle in the blank next to its best description. A. Control principle D. Flexibility principle B. Relevance principle E. Cost-benefit principle C. Compatibility principle 1. The principle prescribes the accounting information system to change in response to technological

Butterflies Essay

566 words - 3 pages aircraft industry there is an abundant amount of tangible property that has to protected. Tangible property that the rights must be... Save Paper It/205 Week 4 Assignment /205 week 4 Checkpoint How e-mail would benefit an organization is that when they e-mail, it makes it easier to get feedback from customers. Also, they can use the... Save Paper Acc 260 Finals Solving Ethical Dilemmas in the Accounting Profession Ebony Wright University of