2. Undervalued and unrecorded assets, unrecorded liabilities, pre-acquisition reserves transfers On 1 August 20x3, Erik Ltd acquired 10% of the shares in Firm Ltd for $8000. Erik Ltd used the fair value method to measure this investment with movements in fair value being recognised in prot or loss. At 1 July 20x5, the fair value of this investment was $15 400 including dividend. The original investment in Firm Ltd was due to the fact that Finn Ltd was undertaking research into particular microbiological elements that could inuence the protability of Erik Ltd. With the continuing success of this research, Erik Ltd decided to acquire the remaining shares (cum div.) in Firm Ltd. On 1 July ZOXS, Erik Ltd made an offer, on a cum div basis, to buy the remaining shares in F inn Ltd for $151 000 cash. This offer was accepted by the shareholders of Firm Ltd. On 1 July 20X5, immediately after the business combination, the statement of nancial position of Finn Ltd was as follows. Eli ltd Finn lll Share capital $131!!!! 8 90!!!! General reserve $50.1 12m Retained earnings 93500 361!!! 7W \"W \"M 3% Dividend payable 250m 1251!) Other liabilities 150m 250m Totalliabnee' ' s $100000 8 37m Total equity end liabilities mm 8175 am Cash 11000 new Receivables 25200 20M Other assets 10!!!! Bill] Shares in Finn Ltd 153m 0 Inventories 55000 420110 Plant and equipment 210M] 103'!!!) Accumulated depreciation (85 (Ill) {22 lllll Total assets $330000 SUSHI)