A. On 30 June 2020 River Ltd acquired 70% shares in Tributary Ltd for $90,000. The statements of financial position of both companies at that date (but prior to acquisition) were as follows: Cash Accounts receivable Inventories Property, plant and equipment Goodwill Financial assets Tributary Ltd ($) 1,000 25,000 18,000 155,50062 0e River Ltd ($) 125,000 30,000 50,000 275,000 20,000 60,000 560,000 65,000 0 400,000 95,000 560,000 Accounts payable Loan payable Share capital - $1 share Retained earnings 22,500 222,000 80,000 40,000 82,000 20,000 222,000 The notes to Tributary Ltd's financial statements reported a contingent liability relating to a loan guarantee. Although a present obligation existed, Tributary Ltd did not recognise a liability because of the difficulty of measuring the ultimate amount to be paid. River Ltd assessed the fair values of the recorded identifiable assets of Tributary Ltd as: Cash Accounts receivable Inventories Property, plant and equipment Financial assets $1,000 21,000 16,000 180,000 $25,000 Tributary Ltd had also been undertaking research into new manufacturing equipment and had expensed a total of $15,000 research costs. River Ltd assessed that the fair value of the in-process Non-controlling interest =) Goodwill ( c. Prepare the business combination valuation entries. (6 marks) Answer: Business combination valuation entries K Dr ($) Cr ($) ca ] IA a da ca ca 1 d. Prepare the pre-acquisition entry. (2 mark) Answer: Pre-acquisition entry Dr ($) Cr ($) e. Prepare the consolidation worksheet after the acquisition. (10 marks) Answer: Consolidation Worksheet River Ltd and Its Subsidiary + Consolidation Worksheet Date/year: Consolidation adjustment River Ltd Tributary Dr ($) Cr ($) Ltd ($) Assets K] Consolidated Liabilities and Equity f. Prepare the consolidated Statement of Financial Position as at 30 June 2020. (5 marks) Answer: Consolidated Statement of Financial Position River Ltd and Its Subsidiaryer Consolidated Statement of Financial Position Date/Year: Amount ($) Assets Total assets Liabilities Total liabilities Equity 2 ] 44 Total equity Total liabilities and equity A. On 30 June 2020 River Ltd acquired 70% shares in Tributary Ltd for $90,000. The statements of financial position of both companies at that date (but prior to acquisition) were as follows: Cash Accounts receivable Inventories Property, plant and equipment Goodwill Financial assets Tributary Ltd ($) 1,000 25,000 18,000 155,50062 0e River Ltd ($) 125,000 30,000 50,000 275,000 20,000 60,000 560,000 65,000 0 400,000 95,000 560,000 Accounts payable Loan payable Share capital - $1 share Retained earnings 22,500 222,000 80,000 40,000 82,000 20,000 222,000 The notes to Tributary Ltd's financial statements reported a contingent liability relating to a loan guarantee. Although a present obligation existed, Tributary Ltd did not recognise a liability because of the difficulty of measuring the ultimate amount to be paid. River Ltd assessed the fair values of the recorded identifiable assets of Tributary Ltd as: Cash Accounts receivable Inventories Property, plant and equipment Financial assets $1,000 21,000 16,000 180,000 $25,000 Tributary Ltd had also been undertaking research into new manufacturing equipment and had expensed a total of $15,000 research costs. River Ltd assessed that the fair value of the in-process Non-controlling interest =) Goodwill ( c. Prepare the business combination valuation entries. (6 marks) Answer: Business combination valuation entries K Dr ($) Cr ($) ca ] IA a da ca ca 1 d. Prepare the pre-acquisition entry. (2 mark) Answer: Pre-acquisition entry Dr ($) Cr ($) e. Prepare the consolidation worksheet after the acquisition. (10 marks) Answer: Consolidation Worksheet River Ltd and Its Subsidiary + Consolidation Worksheet Date/year: Consolidation adjustment River Ltd Tributary Dr ($) Cr ($) Ltd ($) Assets K] Consolidated Liabilities and Equity f. Prepare the consolidated Statement of Financial Position as at 30 June 2020. (5 marks) Answer: Consolidated Statement of Financial Position River Ltd and Its Subsidiaryer Consolidated Statement of Financial Position Date/Year: Amount ($) Assets Total assets Liabilities Total liabilities Equity 2 ] 44 Total equity Total liabilities and equity