Undervalued assets, pre‐acquisition reserves transfers  LO3, 4, 5 On 1 July 2019, Mutt Ltd acquired all the issued shares of Jeff Ltd for $174 800. At this date the equity of Jeff Ltd consisted of share capital of $80 000 and retained earnings of $68 800. All the identifiable assets and liabilities of Jeff Ltd were recorded at amounts equal to fair value except for the following. Carrying amount Fair value Patent $60 000 $72 000 Plant (cost $80 000) 40 000 48 000 Inventories 21 600 28 000 The patent was considered to have an indefinite life. It was estimated that the plant had a further life of 10 years, and was depreciated on a straight‐line basis. All the inventories were sold by 30 June 2020. In May 2020, Jeff Ltd transferred $20 000 from the retained earnings on hand at 1 July 2019 to a general reserve. In June 2020, Jeff Ltd conducted an impairment test on the patent and on the goodwill acquired. As a result, the goodwill was considered to be impaired by $1200. The tax rate is 30%. Required 1. Prepare the acquisition analysis at 1 July 2019. 2. Prepare the consolidation worksheet entries for Mutt Ltd’s group at 1 July 2019. 3. Prepare the consolidation worksheet entries for Mutt Ltd’s group at 30 June 2020.