3. Undervalued and unrecorded assets, unrecorded liabilities, pre-acquisition reserves transfers On 1 August 20X3, Erik Ltd acquired 10% of the shares in Finn Ltd for $8000. Erik Ltd used the fair value method to measure this investment with movements in fair value being recognised in profit or loss. At 1 July 20X5, the fair value of this investment was $15 400 including dividend. The original investment in Finn Ltd was due to the fact that Finn Ltd was undertaking research into particular microbiological elements that could influence the profitability of Erik Ltd. With the continuing success of this research, Erik Ltd decided to acquire the remaining shares (cum div. ) in Finn Ltd. On 1 July 20X5, Erik Ltd made an offer, on a cum div basis, to buy the remaining shares in Finn Ltd for $151 000 cash. This offer was accepted by the shareholders of Finn Ltd. On 1 July 20X5, immediately after the business combination, the statement of financial position of Finn Ltd was as follows.Erilt Ltd Finn Ltd Share capital $130M0 3 90030 General reserve SEED 12W} Hetain ed earnings 9:? 500 36 000 Total equity $200 [00 $138 one Dividend payable 25000 l2800 Other liabilities 1'5 [I10 25000 Total liebilies sun can 3 3? son Total equity and liabilities $330 non $115 000 Be sh I l mo 20 one Receivables 25310 zoom Either assets 10 [I10 Bill] Shares in rm Ltd 153mm 0 lnventc ries 55 mo 42 um Plant and equipment 210 [I10 10? an Accumulated depreciation [05 mm [22 [Kill Total assets $330 non SITE 800 On analysing the nancial statements of Finn Ltd, Erik Ltd determined that all the assets and liabilities recorded by Firm Ltd were shown at amounts equal to their fair values except for: Carrying must Fair value Plant and equipmentlcostml $35000 $43 000 Inventories 12 000 40 000 The plant and equipment is expected to have a lrther 4-year useful life and is depreciated on a straight-line basis. The inventories were all sold by 30 June 20X6. Firm Ltd had expensed all the outlays on research and development. Erik Ltd considered that an asset was created and placed a fair value of$12 000 on this asset. The research and development is amortised evenly over a 10-year period. Firm Ltd also had reported a contingent liability at 30 June 20x5 in relation to claims by customers for damaged goods. Erik Ltd placed a fair value of $3000 on these claims. The claims by customers were settled in May 20X6 for $2300. The tax rate is 30%. Required Prepare the consolidation worksheet entries for Erik Ltd's group at 30 June 20X6