Griffin Ltd acquired all the issued shares (cum div.) in Python Ltd on 1 July 2020, paying
Fantastic news! We've Found the answer you've been seeking!
Question:
Griffin Ltd acquired all the issued shares (cum div.) in Python Ltd on 1 July 2020, paying $905 000 cash. | |||||||||
Costs incurred in undertaking the acquisition amounted to $7 000, these did not relate to issuing the new shares. | |||||||||
On 30 June 2020, the financial statement of Python Ltd showed the following balances: | |||||||||
Share capital (12,000 shares @ 50 each) | $600,000 | ||||||||
Retained earnings | $270,000 | ||||||||
Dividend payable | $36,000 | ||||||||
Goodwill | $17,500 | ||||||||
All the identifiable assets and liabilities of Python Ltd at the acquisition date were recorded at amounts equal to their fair values except for: | |||||||||
Carrying amount | Fair value | ||||||||
Inventory | $60,000 | $52,000 | |||||||
Plant (Cost $1,250,000) | $875,000 | $887,000 | |||||||
The assets recognised by Python Ltd did not include an internally generated patent of Python Ltd that was valued by Griffin Ltd at $28,000. | |||||||||
Its useful life was considered to be 4 years, with benefits being received equally over that period. | |||||||||
80% of the inventory on hand at the acquisition date was sold by 30 June 2021. The plant is expected to have a further useful life of 5 years. The tax rate is 30%. | |||||||||
Required: | |||||||||
Show the acquisition analysis as at 1 July 2020 and prepare the pre-acquisition consolidation worksheet at 30 June 2021, | |||||||||
Assume that goodwill is accounted for as a Business Combination Valuation Reserve (BCVR) entry. | |||||||||
Please perform your acquisition analysis at 1 July 2020 here: |
Related Book For
Posted Date: