Craigwood Ltd acquired all the issued shares (cum div.) of Grandburn Ltd for consideration of $3,700,000 on

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Question:

Craigwood Ltd acquired all the issued shares (cum div.) of Grandburn Ltd for consideration of $3,700,000 on 1 January 2023. On the date of acquisition Grandburn Ltd's Statement of Financial Position showed the following balances:

Share Capital - 1,250,000 Shares $2,500,000

Retained Earnings $825,000

General Reserve $210,000

Asset Revaluation Surplus $120,000

Dividend Payable $75,000

On 25 October 2023, the dividend payable of $75,000 was paid off.

On the date of acquisition, all the identifiable assets and liabilities of Grandburn Ltd were recorded at amounts equal to fair value except for:

Inventory:

Carrying Amount - $275,000

Fair Value - $315,000

Land:

Carrying Amount - $800,000

Fair Value - $920,000

Plant (cost $300,000)

Carrying Amount - $225,000

Fair Value - $240,000

The plant has a further 5 year useful life and is depreciated on a straight-line basis. On 1 March 2023, all inventory was sold. On 30 November 2023, all land was sold. There is a 30% tax rate.

1a) Prepare the acquisition analysis for Craigwood Ltd at 1 January 2023

b) Prepare the BCVR and pre-acquisition consolidation journal entries for Craigwood Ltd at 1 January 2023. All workings and narrations must be provided.