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Could you give me an explanation or calculation? If you are not sure, don't answer Exercise 27.4 Undervalued and unrecorded assets, unrecorded liabilities On 1
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Exercise 27.4 Undervalued and unrecorded assets, unrecorded liabilities On 1 July 2019, Ava Ltd acquired all the issued shares of Isabel Ltd for a cash consideration of $1 000 000. At that date, the financial statements of Isabel Ltd showed the following information. Share capital General reserve Retained earnings $650 000 20 000 250 000 All the assets and liabilities of Isabel Ltd were recorded at amounts equal to their fair values at the acquisition date, except some equipment recorded at $50 000 below its fair value with a related accumulated depreciation of $80 000. Also, Ava Ltd identified at acquisition date a contingent liability related to a lawsuit where Isabel Ltd was sued by a former supplier and attached a fair value of $40 000 to that liability. Required 2. Prepare the consolidation worksheet entries for Ava Ltd's group at 1 July 2019, assuming that Isabel Ltd has not revalued the equipment in its own accounts. 2. Consolidation worksheet entries at 1 July 2019 if the equipment is not revalued in subsidiary's accounts: BCVR entries at 1 July 2019: 80 000 Accumulated depreciation - equipment Dr Equipment Cr Business combination valuation reserve Cr Deferred tax liability Cr Deferred tax asset Dr Business combination valuation reserve Cr Provision for damages Cr 30 000 35 000 15 000 12 000 28 000 40 000 73 000 Goodwill Dr Business combination valuation reserve Cr 73 000Step by Step Solution
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