Question

On 1 July 2032, Kiwi Ltd, a company based in Auckland, New Zealand, acquired all of the issued shares of Seattle Ltd, an American software development company based in Washington State. The trial balance in US dollars) for Seattle Ltd for the last two years appears below: Y/E 30/06/33 Deblt Credit 225,000 50,000 350,000 1,025,000 $ 2,300,000 300,000 1,800,000 325,000 200,000 800,000 500,000 825,000 1,200,000 1,800,000 500,000 300,000 500,000 4,000,000 2,100,000 100,000 125,000 100,000 712,500 Y/E 30/06/32 Deblt Credit 400,000 325,000 300,000 525,000 2,050,000 200,000 1,500,000 200,000 200,000 700,000 400,000 1,550,000 Cash Accounts receivable Inventory (Opening balance) Land Equipment Accum. Depn. - Equipment Plant Accum. Depn.- Plant Trademarks Accounts payable Dividends Payable Provisions Loan - Washington Bank Share capital Retained earnings (Opening balance) Dividend paid Dividend declared Sales Purchases Depreciation - Equipment Depreciation - Plant Interest Other expenses 1,800,000 425,000 275,000 400,000 3,250,000 1,475,000 75,000 87,500 587,500

Answer 1

Seattle Ltd Profit and Loss (P&L) Statement [USD $ millions] 2033 40,00,000.0 Revenue from Sales Returns, Refunds, Discounts Total Net Revenue 40,00,000.0 Cost of Goods Sold (Note 1) Gross Profit 17,50,000.0 22,50,000.0 Expenses Depreciation & Amortization Other Expense Total Expenses Earnings Before Interest & Taxes 2,25,000.0 7,12,500.0 9,37,500.0 13,12,500.0 Interest Expense Earnings Before Taxes 1,00,000.0 12,12,500.0 Income Taxes Net Earnings 3,62,500.0 8,50,000.0 Notes:- Cost of Goods Sold (Note 1) Opeining Stock Purchases Closing Stock 350000 2100000 -700000 Total 1750000

Seattle Ltd Statement of changes in equity for the year ended 30th June 2033 Share capital Retained Revaluation Total equity earnings Surplus Particulars USD USD USD USD Balance at 1 July 2032 1800000 500000 0 23000001 Changes in equity for the year 2032 -500000 -300000 Dividends Declared Dividends Paid Dividends Payable Income for the year Revaluation gain -500000 -300000 500000 850000 0 850000 0 Balance at 30 June 2033 1800000 1050000 0 2350000

Seattle Ltd Statement of financial position as at 30th June 2033 2033 Particulars 2032 USD USD Assets Non-Current Assets Property, Plant & Equipment Goodwill Intangible Assets 4500000 3675000 200000 200000 4700000 3875000 700000 350000 Current Assets Inventories Trade Receivables Cash and cash equivalents 50000 225000 975000 5675000 325000 400000 1075000 4950000 Total Assets Equity and Liabilities 1800000 1800000 Equity Share Capital Retained Earnings Revaluation Reserve Total Equity 1050000 900000 2850000 2700000 Non-current liabilities Long-term borrowings 1200000 800000 700000 Current Liabilities Trade and other payables Short-term borrowings Current portion of long-term borrowings Other Current Liabilities (Provisions) Total current liabilities Total liabilities Total equity and liabilities 1550000 2250000 825000 1625000 2825000 5675000 2250000 4950000