Gingimup Ltd purchased all the equity of Kindawansa Ltd on 30 June 2005. At that time the carrying value of the net assets of Kindawansa was $1,200,000. This amount was made up in equity as follows: share capital $1,000,000; retained earnings $200,000. Kindawansa has held some valuable land for a long time (purchased at $ 1,200,000), but has not revalued it. Its fair value at 30 June 2005 was $2,800,000 (all other non-current assets are recorded at fair value). Gingimup Ltd paid cash consideration of $3,000,000 for Kindawansa Ltd. Assuming that the land has not been revalued in the controlled entity's books, what are the elimination entries required to reflect the purchase of Kindawansa Ltd?
E) None of the given answers.

Question

Quizplus · Accepted Answer

The Answer of Gingimup Ltd purchased all the equity of Kindawansa Ltd on 30 June 2005. At that time the carrying value of the net assets of Kindawansa was $1,200,000. This amount was made up in equity as follows: share capital $1,000,000; retained earnings $200,000. Kindawansa has held some valuable land for a long time (purchased at $ 1,200,000), but has not revalued it. Its fair value at 30 June 2005 was $2,800,000 (all other non-current assets are recorded at fair value). Gingimup Ltd paid cash consideration of $3,000,000 for Kindawansa Ltd. Assuming that the land has not been revalued in the controlled entity's books, what are the elimination entries required to reflect the purchase of Kindawansa Ltd?
E) None of the given answers.

Gingimup Ltd Purchased All the Equity of Kindawansa Ltd on 30