On 1 July 2021, Oldfield Ltd acquired 23% of the shares of Shadow Ltd for $340,000. There

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Question:

On 1 July 2021, Oldfield Ltd acquired 23% of the shares of Shadow Ltd for $340,000. There is a presumption that, as the shareholding is greater than 20%, Oldfield Ltd exerts a significant influence over the management of Shadow Ltd.

At the date of the acquisition of the 23% shareholding the equity of Shadow Ltd was made up of:

Share capital Retained earnings	$ 561,000 374,000
General reserve	85, 000
Total equity	$ 1,020,000

At 1 July 2021, with the exception of land and plant, and machinery, all the identifiable assets, and liabilities of Shadow Ltd were recorded at their fair values.

Carrying amount

Fair value

Land

$ 935,000

$ 1,275,000

Plant and machinery

(cost $780, 000)

650,000

715,000

It was assessed that the plant and machinery would remain in operation for a further 5 years. With the revaluation of the land, Shadow Ltd created an Asset Revaluation Surplus Account and measured the value of the land annually. The tax rate is 30%.

The following is an extract from the financial statements of Shadow Ltd for 30 June 2023:

Profit before tax	$ 612,000
Income tax expense	(255,000)
Profit after tax	357,000
Retained earnings at 1 July 2022	697,000
	1,054,000
Dividends paid	(34,000)
Dividends declared	(42,500)
Transfer to general reserve	(27,500)
Retained earnings on 30 June 2023	950,000
General reserve on 1 July 2022	102,000
Transfer from retained earnings	27,500
General reserve on 30 June 2023	129,500
Asset revaluation surplus on 1 July 2022	284,000
Other comprehensive income — gains on the revaluation	11,500
Asset revaluation surplus at 30 June 2023	295,500
Share capital on 30 June 2023 Total equity on 30 June 2023	561,000 $1,936,000

Required

Prepare the Oldfield Ltd journal entries to include its equity investment in Shadow Ltd in the consolidated financial statements on 30 June 2023.

Please answer step by step.
1, Acquisition analysis:
Calculate: Net fair value of identifying assets
and liabilities
Consideration transferred
Goodwill acquired
2, Worksheet entries
Business combination valuation entries
Pre-acquisition entries