question of advanced economical assignment

 question of advanced economic assignment Study Paper



On one particular July 2012, Captain Ltd acquired each of the shares of Stirling Limited. The recorded equity of Stirling Limited at that time was:

Reveal Capital $22.99 000

Standard Reserve$50 500

Asset Revaluation Reserve$31 000

Retained Earnings$27 000

In acquisition day, all the identifiable assets and liabilities of Stirling Limited were recorded at amounts equal to good value aside from:



Inventory$38 000$42 000

Gear (cost $210 000)162 000177 000

Making Licence100 000120 000

Packaging Plant (cost $60 000)40 00034 1000

(*)Stirling Limited has recorded goodwill of $5 500 acquired using a business combo undertaken this season. On 30 June 2013, the directors of Stirling Ltd, beneath instructions via Captain Ltd wrote off the goodwill property as totally impaired.

The manufacturing licence has a term of 20 years but then can be renewed pertaining to an indefinite period. Stirling Limited intends to renew the licence.

(*)Additionally, Stirling Ltd possesses, but hasn't recognised, a patent for the design of a particular packing equipment. The patent has a fair value for 1 This summer 2012 of $42 1000 and will terminate on 35 June 2016. On twenty-five June 2014, the chief economic officer of Captain Limited assessed that, due to transformed market conditions the obvious was reduced by $5 000.

(*)On 1 July 2012, Stirling Ltd was involved in a dispute which has a customer about the supply of faulty products. A court is planned for The fall of 2012 and lawyers to get Captain Limited have suggested that injuries are likely to figure to $12 000. Subsequently, the court found Stirling Limited guilty and damages of $11 five-hundred were paid in December 2012.

Of the products on hand on hand in Stirling Limited at one particular July 2012 seventy percent (70%) was marketed during the year ended 30 June 2013 with all the balance offered by 40 June 2014.

The taking plant, which in turn had a further three-year existence on acquisition date was sold about 1 Apr 2014 and replaced with a great updated style. The equipment was estimated to experience a further four-year life.

Any modifications for variations between transporting amounts for acquisition date and reasonable values are created on consolidation. Any valuation reserves developed are transmitted on consolidation to retained earnings once assets can be purchased, fully consumed or totally impaired.

(*)On 29 Summer 2013, the directors of Stirling Limited declared a benefit share gross of $20 000 payable from the basic reserve. In 25 06 2014, the directors of Stirling transmitted the remaining balance of the general reserve to retained earnings.

Additional information:

Upon 1 September 2013, Stirling Ltd has on hand products on hand worth $15 000 moved from Chief Ltd in 3 June 2013. The inventory had cost Captain Ltd $11 000 to manufacture. Simply by 30 June 2014, Stirling Ltd acquired sold the complete inventory to external get-togethers. On 1 January 2014, Stirling Ltd sold a building to Captain Limited for $40 000. Home had a holding amount at the date of sale of $45 000. Chief Ltd examined the useful life from the building at 15 years. On 1 October 2012, Stirling Limited sold equipment to Chief Ltd to get $25 500. This had originally price Stirling Ltd $38 500 and had a carrying amount at the time of sale for $20 1000. Both organizations charge depreciation at a rate of 10% s. a. straight-line. (*)(*)On 1 July 2012, Stirling Ltd lent 50 dollars 000 to Captain Limited at an interest per annum rate of 5%. The loan was repaid in full about 31 December 2013. Captain Ltd distributed an item of inventory to Stirling Ltd on one particular February 2014 for $12 000. Stirling Ltd grouped this item as products with a useful life of three years. The inventory experienced originally price $9 300. On 15 May 2014, Stirling Ltd sold inventory to Captain Ltd for $52 000. The products on hand had cost Stirling Ltd $46 000. Three quarters (75%) of the products on hand had been purcahased by external functions by 40 June 2014. The sale was on credit rating with just half of the amount owing staying paid by simply...