On 1 July 2021 Millar Ltd acquired the identified net assets of Cameron Ltd. The statement of

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Question:

On 1 July 2021 Millar Ltd acquired the identified net assets of Cameron Ltd. The statement of financial position of Cameron Ltd immediately before the takeover is as follows.

	Carrying amount
Cash	$	20 000
Accounts receivable		75 000
Land & Buildings		675 000
Plant & equipment (net)		230 000
Vehicles (net)		65 000
	$	1 065 000
Accounts payable	$	80 000
Loan		140 000
Share capital (400,000 ordinary shares)		400 000
Retained earnings		445 000
	$	1 065 000

Millar Ltd acquired all the assets of Cameron Ltd except for cash. All assets were found to be at fair value except for:

accounts receivable had to be adjusted for an unrecoverable debtor of $12 500

Plant & equipment had a fair value of $285,000 and had not been revalued in the books of Cameron Ltd.

Cameron Ltd had an internally generated patent to be acquired by Millar Ltd, not recorded in the books with a fair value of $55 000.

Millar Ltd is to take over identified annual leave entitlements of $13 000 not recorded in Cameron Ltd’s books.

Consideration for the acquisition from Cameron Ltd was as follows:

issued 100 000 shares in Millar Ltd having a fair value of $6 per share,

cash $400 000 paid on 1 July 2021

Millar Ltd was to supply Cameron Ltd with sufficient additional cash, when added to the cash already held to settle the loan and accounts payable plus liquidation costs of $5 000.

Required

a. Prepare the acquisition analysis for Millar Ltd in accordance with AASB3 Business Combinations.

b. If the fair value of the share price at acquisition was $5 per share, explain how this would impact on the acquisition entries in the records of Millar Ltd?

c. Give examples showing how the accounting entries would differ if Millar Ltd had acquired 100% of the share capital of Cameron Ltd instead of the assets and liabilities of Cameron Ltd?