Consolidation: Principles, accounting requirements and intra-group transactions
Topics 1 & 2: Consolidation: Principles, accounting requirements and intra-group transactions On 1 July 2015, Peace Ltd acquired all the shares of Sublime Ltd. At this date, the equity and liability sections of Sublime Ltd’s statement of financial position comprised of the following items: $ Share capital (30 000 shares) 30 000 Retained earnings 10 500 General reserve 15 000 Other reserves 3 000 At acquisition date, all the identifiable assets and liabilities of Sublime Ltd were recorded at amounts equal to fair value except for: Carrying amount Fair value $ $ Inventory 25 000 28 000 Equipment (cost $15 000) 12 000 16 000 Machinery (cost $8 500) 7 500 8 000 Land 9 240 12 240 The inventory on hand in Sublime Ltd at 1 July 2015 was sold during September 2015. The machinery which had a further 5-year life on acquisition date was sold on 1 January 2017. The land on hand at acquisition date was sold by 1 March 2016. The equipment was estimated to have a further 8-year life...