consolidation question!I am waiting online, thank u sooooo much!Allteck Building Ltd (“Allteck”) build luxury homes.
In an aTempt to ver±cally integrate their
business, they acquired all of the shares of Landfry Ltd (“Landfry”) on 1 July 2016 on an ex-
Due to a downturn in the property market, Landfry made a loss in the prior
year for the Frst ±me. Legal and accoun±ng fees related to the acquisi±on totalled $11000.
On 1 July 2016, Landfry had the following in its balance sheet;
$275,000 (carrying amount of $85,000)
²air value of $65,000
²air value of $60,000
²air value of $2,900,000
$600,000 (carrying amount of $120,000)
²air value of $850,000
²air value of Nil
2016/2017 impairment tes±ng reduces the carrying value of goodwill to $10,000.
building premises and plant are being depreciated on a straight-line basis over 20 years and
10 years respec±vely.
³he building was acquired on 1 Jan 2001 and the plant has a further 3
years of deprecia±on remaining.
³he trademark is considered to have an indeFnitely life.
Landfry currently has a legal dispute with a customer who claims that they were not advised
of problems with the ±tle of some land.
³hey are suing Landfry for $350,000 and the
directors believed there was a 35% chance of success at that stage.
³his was seTled on
15/5/18 for $80000.
All of the inventory was sold in the 2016 year.
³he business turned around and on 1/3/18, Landfry was able to pay a $30,000
Shareholder approval is not required in rela±on to payment of
On 1/1/17, a parcel of land cos±ng Landfry $450,000 on 30 Nov 2016 was sold to
Allteck for $620,000 to build a display home.
It is not expected that this land will
be sold in the immediate future.
On 30/06/17, Allteck sold a motor vehicle to Landfry for $50,000 for use by one
³he vehicle cost Allteck $80,000 in Jan 2017 and it had a carrying value
of $65,000 at the date of sale. ³he M/V was being depreciated on a straight line
basis over 5 years.
During the 2017/2018 year, Landfry began selling some of the land acquired in
Jan 2018 to Allteck to include as a home and land package.
³here were two
blocks sold during the year, which cost Landfry $300,000 and $380,000.
were sold to Allteck at a 15% margin.
Only the Frst block was sold before 30
June 2018 with Allteck recording the other block as part of their work in progress
This question was answered on: Sep 21, 2023
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