Jasper Ltd acquires all the issued capital of Carrot Ltd for a cash payment of $2,800,000 on 30 June 2004.The balance sheet of both entities at purchase date is: Assuming the assets of Carrot Ltd are recorded at fair value,what is the consolidated balance sheet at the date of purchase?
E) None of the given answers.

Question

Jasper Ltd acquires all the issued capital of Carrot Ltd for a cash payment of $2,800,000 on 30 June 2004.The balance sheet of both entities at purchase date is:  Assuming the assets of Carrot Ltd are recorded at fair value,what is the consolidated balance sheet at the date of purchase?
E) None of the given answers.

Quizplus · Accepted Answer

To create a consolidated balance sheet, we need to add the assets and liabilities of both entities. 
For the assets of Carrot Ltd, we use fair values provided in the question. 
For the liabilities of Carrot Ltd, we assume they are recorded at carrying value. 
Then we add in all of Jasper Ltd's assets and liabilities. 
The answer that matches this process is B.

Jasper Ltd Acquires All the Issued Capital of Carrot Ltd