ONYA Ltd (ONYA) is a cloud based business management solutions provider. First listed on the Australian Securities Exchange (ASX) in 2014, ONYA recorded a healthy annual profit in the last financial year, boosted by increased online subscriber growth. At ONYAs January 2018 board meeting CEO James Dunn outlined details of a recent new acquisition. The acquisition is an Australian company, Remit Pty Ltd (Remit), which is an Australian payments solutions provider. Remit has more than 8,000 clients across Australia, including banks and businesses of various sizes. The acquisition of Remit will allow ONYA to bridge a gap between its accounting and payments solutions and will potentially open up an $400 million accounting software payment market to ONYA. The acquisition was via a sale and purchase agreement to acquire 100% of Remit for $40 million cash. The ONYA board were generally positive about the acquisition and much of the boardroom discussion focused on the valueadd of Remit to ONYAs existing business. However, several of ONYAs directors expressed concern about the nature and amount of the assets involved in the Remit acquisition as the most recent financial statements for Remit indicated that ONYA was paying $40 million for net assets with a carrying value of just over $4 million. ONYAs CFO Wendy Patton was asked about this issue and about the impact of the acquisition on ONYAs financial statements. Wendy replied that Remit controlled significant intangible assets that it was not permitted to recognise in its own financial statements but that the ONYA Group should recognise in a business combination. Wendy agreed to provide proforma (projected) financial statements and supporting calculations to the board to demonstrate the estimated effect of the Remit acquisition. You commenced working at ONYA as a graduate accountant a year ago. After the board meeting, Wendy Patton sends for you and asks that you help to prepare detailed responses for the board. Wendy provides you with some data and the most recent Statements of Financial Position for ONYA and for Remit. The following information is also relevant: ONYA is the ultimate parent of a preexisting group at 1 January 2018.Remit is not a member of a group.ONYA and its subsidiaries have not adopted tax consolidation.There are no intragroup sales or dividends.Both the ONYA Group and Remit have a 31 December financial year end.Remits recorded net assets are stated at fair value.Assume that the financial statement excerpts provided are reasonable estimates of the acquisition date financial statements of both companies just prior to the acquisition.Initial due diligence undertaken by ONYA indicates that in addition to the recorded assets and liabilities, Remit also controls the following unrecognised identifiable intangible assets:a.Customer relationships with an estimated fair value at 1 January 2018 of$12,400,000. Estimated economic life is 10 years.b.Commercialised software with an estimated fair value at 1 January 2018 of$5,333,333. Estimated economic life is 5 years.c.Brand name (Remit) with an estimated fair value at 1 January 2018 of $1,600,000. Estimated economic life is 5 years.The corporate tax rate is 30%. Prepared by Associate Professor Frank Zhang University of Qld for ACCT7104 Corporate Accounting Semester 1 2022 Required: (a)ONYA acquired Remit for $40 million cash on 1 January 2018. Using the information provided, prepare an acquisition analysis clearly showing the amount of goodwill arising on the acquisition. Where relevant you should refer to Australian Accounting Standards and/or relevant professional guidance or research literature.(b)Briefly discuss the initial recognition and subsequent accounting treatment of the intangible assets, including goodwill, acquired by ONYA in the Remit acquisition. Where relevant you should refer to Australian Accounting Standards and/or relevant professional guidance or research literature.(c)Prepare in good form a consolidated Statement of Financial Position for the ONYA Group including Remit, at 1 January 2018 (immediately after the acquisition).(d)Prepare a report to Wendy Patton that summarises the effect of the acquisition on the ONYA Group and recommends the accounting treatment for the Remit net assets acquired. You should briefly refer to relevant accounting standards to support your overall recommendations.

Statements of Financial Position: ONYA Ltd Group Consolidated Statement of Financial Position as at 31 December 2017 Current Assets: ($000) Cash and cash equivalents 71,432 Trade and other receivables 14,566 Inventories 216 Total Current Assets 86,214 NonCurrent Assets: Receivables 2,398 Equity accounted investments 7,664 Property, plant and equipment (net) 18,776 Intangible assets 1,164,322 Total NonCurrent Assets 1,193,160 Total Assets 1,279,374 Current Liabilities: Trade and other payables 19,688 Borrowings 488 Unearned revenue 52,344 Provisions 13,221 Total Current Liabilities 85,741 NonCurrent Liabilities: Borrowings 501,450 Provisions 12,965 Total NonCurrent Liabilities 514,415 Total Liabilities 600,156 Net Assets 679,218 Shareholders Equity: Issued capital 1,008,100 Retained profits (380,382) General reserve 51,500 Total Shareholders Equity 679,218

Remit Pty Ltd Statement of Financial Position as at 31 December 2017 Current Assets: ($000) Cash and cash equivalents 4,282 Accounts Receivable 1,700 Prepayments 1,000 Total Current Assets 6,982 NonCurrent Assets: Property, Plant and equipment (net) 127 Total NonCurrent Assets 127 Total Assets 7,109 Current Liabilities: Accounts payable 2,340 Tax payable 620 Total Current Liabilities 2,960 Total Liabilities 2,960 Net Assets 4,149 Shareholders Equity: Issued capital 2,000 Retained profits 1,629 General reserve 520 Total Shareholders Equity 4,149