On 1 July 2019, White Ltd acquired 30% (enough to constitute a significant influence) of Orange Ltd’s equity for consideration of $600,000. At the acquisition date, Orange Ltd’s equity consisted of:

 

Share capital	$650,000
General reserve	800,000
Retained profits	40,000

 

All of Orange Ltd’s assets and liabilities were recorded at fair value at the acquisition date.

 For the year ended 30 June 2020, Orange Ltd recorded an after-tax profit of $50,000.

 For the year ended 30 June 2021, Orange Ltd recorded a loss of $30,000 and paid a dividend of $20,000.

 White Ltd does not prepare consolidated financial statements.
 

Required:

Prepare the acquisition analysis and journal entries in the books of White Ltd for its investment in its associate Orange Ltd for the years ended 30 June 2020 and 30 June 2021.
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Answer rating: 100% (QA)

Details pertaining 30 acquisition of equity by Whit Ltd from Orange ltd on 1072019 It is required to make analysis of acquisition and prepare the Journal entries for June 30 2020 and for 30 June 2021 ... View the full answer