Moora Ltd acquired all the issued shares ( ex div .) of Banya Ltd on 1 July

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Question:

Moora Ltd acquired all the issued shares (ex div.) of Banya Ltd on 1 July 2023 for $110 000. At this date Banya Ltd recorded a dividend payable of $10 000 and equity of the following.

All the identifiable assets and liabilities of Banya Ltd were recorded at amounts equal to their fair values at acquisition date except for the following.

Of the inventories, 90% was sold by 30 June 2024. The remainder was sold by 30 June 2025. The machinery was considered to have a further 5-year life and it is depreciated on a straight-line basis.

Both Banya Ltd and Moora Ltd use the revaluation model for land. At 1 July 2023, the balance of Moora Ltd's asset revaluation surplus was $13 500.

In May 2024, Banya Ltd transferred $3000 from the retained earnings at 1 July 2023 to a general reserve.

The tax rate is 30%.

The following information was provided by the two companies at 30 June 2024.

	Moora Ltd		Banya Ltd
Profit before tax		120 000			12 500
Income tax expense		(56 000	)		(4 200	)
Profit for the year		64 000			8 300
Retained earnings (1/7/23)		80 000			36 000
		144 000			44 300
Transfer to general reserve		(-	)		(3 000	)
Retained earnings (30/6/24)	$	144 000		$	41 300
Share capital		360 000			54 000
Retained earnings		144 000			41 300
General reserve		10 000			3 000
Asset revaluation surplus		18 500			20 000
Liabilities		42 500			13 000
	$	575 000		$	131 300
Land	$	160 000		$	20 000
Plant and machinery		360 000			125 600
Accumulated depreciation — plant and machinery		(110 000	)		(33 000	)
Inventories		55 000			18 700
Shares in Banya Ltd		110 000			-
	$	575 000		$	131 300