1.List two indicators which can assist in assessing which entity is the acquirer in a business combination. (2 Marks)
2.Define control. (1 Mark)
3.Name two types of business combination which are not covered by the provisions of AASB 3. (2 Marks)
4.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)
5.How are directly attributable acquisition related costs accounted for? Why?
(1 Mark)
6.In accounting for a business combination assets and liabilities acquired and assets and equity given up are measured at fair value on acquisition date. Does this mean that goodwill is also measured at fair value on that date? (1 Mark)
7.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.
The Term Paper on Cezanne’s Jug and Fruit and Zurbaran’s Still Life with Lemons, Oranges and a Rose.
Look carefully at Illustration Book Plate 1.3.24, Cezanne’s Jug and Fruit (1885-87), and Plate 1.3.30 Zurbaran’s Still Life with Lemons, Oranges and a Rose (1633). Identify what you think are the main differences between them. Cezanne’s ‘Jug and Fruit’ (1885-87 Illustration Book Plate 1.3.24) and Zurbaran’s ‘Still Life with Lemons, Oranges and a Rose’ (1633 Illustration Book Plate 1.3.30) are ‘ ...
Required
Prepare the journal entries to record the acquisition. (2 Marks)
8.Fred Walker the accountant for Tamarind Ltd is attempting to record the company’s recent acquisition of PawPaw Ltd. However, he is unable to determine if the acquisition date is 1 November 2013 or 14 November 2013. The managing director has suggested that Fred simply chooses one date as ‘they are so close it will not matter’. Is the managing director correct? (2 Marks)
9.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
Land160 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)
10.Why is the concept of control essential to accounting for business
combinations? (1 Mark)
11.What is goodwill? (1 Mark)
12.What steps should an accountant take immediately after calculating that a gain on bargain purchase has arisen from a business combination transaction? (2 Marks)
13.How and when is goodwill measured? (2 Marks)
14.What is the key difference between identifiable assets and goodwill? (1 Mark)
15.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
Land160 000
Plant and Equipment (net) 82 000
Accounts Payable (36 500)
Loan Payable(40 000)
The Term Paper on Mark Twain 6
When to analyze the works of Mark Twain, it becomes clear that the author’s style is simple and direct. Indeed, the author is very successful in convening his thoughts to the reader. Henry Nash Smith, the critique of Mark Twain’s style once made a remark that Mark Twain’s style is “as close as we are likely to get to the writer’s actual experience … ” (Smith 19). Richard Bridgman’s ...
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)
16.What is a gain on bargain purchase and how is it accounted for? (1 Mark)
17.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 fair value determined for land acquired under that acquisition was flawed and had understated the value of the land by $25 000. What action, if any, should the accountant take? Show any necessary journal entries. (2 Marks)
18.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 AmountFair Value
Cash20 00020 000
Receivables40 00038 000
Inventory27 00042 000
Property, Plant and Equipment135 000157 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 shareholders of Lime Ltd 52 000 Grapefruit Ltd shares each worth $2.80, and sufficient additional cash to pay all outstanding liabilities including liquidation costs of $9 000. Acquisition related costs amounted to $15 000.
Required
Calculate the fair value of the net identifiable assets acquired by Grapefruit Ltd, show all workings. (2 marks)
19.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 AmountFair Value
Cash20 00020 000
Receivables40 00038 000
Inventory27 00042 000
Property, Plant and Equipment135 000157 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 shareholders of Lime Ltd 52 000 Grapefruit Ltd shares each worth $2.80, and sufficient additional cash to pay all outstanding liabilities including liquidation costs of $9 000. Acquisition related costs amounted to $15 000.
The Essay on Cash Flow Cost Costs Accounting
Persuasive Essay Thesis Statement: The key opportunities will be changing processes to reduce the delivered cost of materiel through cost accounting, imbedded cost and cash flow. I. Cost Accounting. activity-based costing B. end product. expenditures II. Imbedded CostA. customers. quality control. paying back invisible costs III. Cash Flow. timely accounts payable cycle. supply replenishment C. ...
Required
Calculate the cost of the business combination, show all workings. (2 marks)
20.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 AmountFair Value
Cash20 00020 000
Receivables40 00038 000
Inventory27 00042 000
Property, Plant and Equipment135 000157 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 shareholders of Lime Ltd 52 000 Grapefruit Ltd shares each worth $2.80, and sufficient additional cash to pay all outstanding liabilities including liquidation costs of $9 000. Acquisition related costs amounted to $15 000.
Required
Determine if the business combination resulted in a goodwill asset being acquired or a gain on bargain purchase being earned. (2 Marks)
