At January 1 2013 Berke Ltd acquired all the shares
At January 1, 2013, Berke Ltd. acquired all the shares of Tauber Ltd. for $283,000. At this date the equity of Tauber consisted of:
Share capital—100,000 shares ... $200,000
Retained earnings........ 70,000
All of Tauber’s identifiable assets and liabilities were recorded at amounts equal to fair value except for the following assets:
The inventory was all sold by June 30, 2013. The plant has a further five-year life, and depreciation is calculated on a straight-line basis.
The tax rate is 40%.
(a) Prepare the acquisition analysis at January 1, 2013.
(b) Calculate the fair value adjustments for 2013.
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