The question is ambigous and not clear. I am a bit confused about it but I am giving you to what extent I have, hopefully, been able to get.
Have all the dividends been recorded by the two parties. Mickey Ltd in 2010 has a dividend declared of $20,000 in the P&L and a dividend payable of $10,000 in the balance sheet!!
First thing the shares are acquired ex div basis this means that the Mickey Ltd would not have the right to the most immediate dividend in this case the dividend paid in period 2007-08 but will be entitled to dividend paid in 2008-09 and 2009-10. Now the dividend in 2008-09 and 2009-10 are paid and declared out of pre-acquisition profits meaning that the cost of investment will be reduced by 80% of the dividend value. But for double entry purposes have these dividend been recorded by Mickey Ltd. For the dividend in 2008-09 of $ 6,000 you should assume yes and removed the dividend from the reserves. For the dividend in 2009-10, you should check the accounts for 30 June 2010 and no where you find dividend receivable of 80% of $4,000. Is it in other current assets? I don't know. Think that should provide for it.
The fair value adjustment should be taken into account on date of acquisition. Therefore the $10,000 form inventory and $ 5,000 from machinery will be taken into account when calculating goodwill. But the corresponding adjusment to the inventory figure which is sold in Nov 2007 therefore realsied in profit should be in reserves then? Same for the machinery as it is sold and the value realised in April 2010? Now since the value of the machinery has increased then the depreciation figure will also increase for the threes years by $ 1,000 each year.
A contingent liability should not be recognised but disclosed. Therefore at acquisition date it was a contingent liability and should not be recognised as per IAS 37.
The asset is still in the research phase and as per IAS 38 it should not be recognised at acquisition date.
An item of plant is sold by Mouse Ltd to Mickey Ltd at a profit before tax of $ 4,000. This should be removed in the 'Other income' in the P&L. Now this is an unrealised profit and should be eliminated on consolidation form the reserves and the cost of the asset should be written back to cost. But has the tax effect been recorded in the accounts of Mouse Ltd? The change in depreciation rate is a change in estimate and no adjustment needed of any kind? The excess depreciation charged on this asset should be crdited back to the reserves and for two years.
The inventory purchased from Mouse Ltd and which had a value of $ 500 has no effect on the consolidation in 2010 as it has already been sold and realised.
The $12,000 should be removed from the P&L account. From the sales of Mickey Lt and the Cost of sales of Mouse Ltd. Now there is a value of $ 3,000 still at 30 June 2010 from which the unrealised profit of $500 should be removed from the inventory figure and the reserves figure.
Has the impairment loss does anything to do with the value of the investment in Mouse Ltd or the impairment is offset against the asset of Mouse Ltd as it is treated as a cash generating unit as per IAS 36.
ARE THESE CORRECT? PLEASE HELP:confused:
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