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6. On 1 January 2020, Big Ltd acquired all the issued shares (non cum. div.) of small Ltd for $750 000. At that date, the

6. On 1 January 2020, Big Ltd acquired all the issued shares (non cum. div.) of small Ltd for $750 000. At that date, the equity of small Ltd was recorded at:

Share capital $350,000

Reserves 150,000

Retained earnings 100 000

On 1 January 2020, the records of small Ltd also showed that the carrying value of the land is $40,000 with a fair value of $50,000 . Further small Ltd had a dividend payable of $5 000, the dividend to be paid in March 2020. All other assets and liabilities except land were carried at amounts equal to their fair values. Applicable tax rate of 30%.

The Pre-acquisition entry for the year ended 30/06/2021

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