Aqua Ltd acquired 45% of the issued ordinary shares of Aerobics Ltd for $260,000 on 1 July 2020 . The equity of Aerobics Ltd at that date was as follows. At acquisition date, all identifiable assets and liablities of Aerobics Ltd were recorded at fair value, except for inventory, which had a fair value that was $12,000 greater than its cost. This inventory was all sold by 30 June 2021 . At 30 June 2021, Aqua Ltd had inventories on hand which had been purchased from Aerobics Ltd for $23,000. Aerobics Ltd had recognised a profit before tax of $6,500 on these sales. At 30 June 2021, Aerobics Ltd had inventories on hand which had been purchased from Aqua Ltd for $28,000. Aqua Ltd had recognised a profit before tax of $9,60 on these sales. For the year ended 30 June 2021, the income and changes in equity of Aerobics Ltd as follows: Additional information: - All dividends are paid/declared out of the current year profit. - Aqua Ltd recognises dividends as revenue when they are declared by the investee. - The tax rate is 30%. Required: a. Prepare an acquisition analysis in relation to the acquisition made by Aqua Ltd. (3 marks) b. Calculate Aqua Ltd's share of Aerobics Ltd's post-acquisition profit for the year ended 30 June 2021. (5 marks) c. Prepare the equity journal entries to account for Aqua Ltd's investment in Aerobics Ltd for the year ended 30 June 2021, assuming that Aqua Ltd pre, consolidated financial statements. (2 marks) Aqua Ltd acquired 45% of the issued ordinary shares of Aerobics Ltd for $260,000 on 1 July 2020 . The equity of Aerobics Ltd at that date was as follows. At acquisition date, all identifiable assets and liablities of Aerobics Ltd were recorded at fair value, except for inventory, which had a fair value that was $12,000 greater than its cost. This inventory was all sold by 30 June 2021 . At 30 June 2021, Aqua Ltd had inventories on hand which had been purchased from Aerobics Ltd for $23,000. Aerobics Ltd had recognised a profit before tax of $6,500 on these sales. At 30 June 2021, Aerobics Ltd had inventories on hand which had been purchased from Aqua Ltd for $28,000. Aqua Ltd had recognised a profit before tax of $9,60 on these sales. For the year ended 30 June 2021, the income and changes in equity of Aerobics Ltd as follows: Additional information: - All dividends are paid/declared out of the current year profit. - Aqua Ltd recognises dividends as revenue when they are declared by the investee. - The tax rate is 30%. Required: a. Prepare an acquisition analysis in relation to the acquisition made by Aqua Ltd. (3 marks) b. Calculate Aqua Ltd's share of Aerobics Ltd's post-acquisition profit for the year ended 30 June 2021. (5 marks) c. Prepare the equity journal entries to account for Aqua Ltd's investment in Aerobics Ltd for the year ended 30 June 2021, assuming that Aqua Ltd pre, consolidated financial statements. (2 marks)
