On January 1, 2013, Pyxis Ltd. acquired all the share capital of Gemini Ltd. for $218,500. At this date, Gemini€™s equity comprised:

Share capital€”100,000 shares .....$100,000

Retained earnings........... 86,000

All Gemini€™s identifiable assets and liabilities were recorded at fair value as at January 1, 2013, except for the following:

The equipment is expected to have a further 10-year life. All the inventory was sold by December 31, 2013. The tax rate is 40%.
Required
Prepare the acquisition analysis and calculate the fair value adjustments for the preparation of consolidated financial statements for Pyxis and its subsidiary Gemini as at:
(a) January 1, 2013.
(b) December 31, 2013.

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Inventory Land Equipment (cost $100,000) Carrying amount $27,000 35,000 50,000 Fair value $35,000 90,000 60,000