Ethan Ltd acquired all the issued shares (cum div.) of Darren Ltd on 1 July 2018 for $110 000 At this date Darren Ltd recorded a dividend payable of $10 000 and equity of Share capital Retained earnings Asset revaluation surplus $54 000 36 000 18 000 All the identifiable assets and liabilities of Darren Ltd were recorded at amounts equal to their fair values at acquisition date except for: Fair value Carrying amount 14 000 92 500 Inventories 16 000 Machinery (cost $100 000) 94 000 The machinery was considered to have a further 5-year life. Of the inventory, 90% was sold by 30 June 2019. The remainder was sold by 30 June 2020 Both Darren Ltd and Ethan Ltd use the valuation method to measure the land. At 1 July 2018, the balance of Ethan Ltd's asset revaluation surplus was $13 500 In May 2019, Darren Ltd transferred $3 000 from the retained earnings at 1 July 2018 to a general reserve. The tax rate is 30 %. The following information was provided by the two companies at 30 June 2019 Ethan Ltd $ 120 000 (56 000) 64 000 80 000 144 000 (0) $144 000 Darren Ltd Profit before tax $12 500 (4 200) Income tax expense Profit for the year Retained earnings (1/7/18) 8 300 36 000 44 300 (3 000) $41 300 Transfer to general reserve Retained earnings (30/6/19) Share Capital Retained earnings General reserve Asset revaluation surplus Liabilities $360 000 $54 000 144 000 41 300 10 000 3 000 18 500 20 000 42 500 13 000 $131 300 $575 000 $160 000 360 000 (110 000) 55 000 $20 000 Land Plant & Machinery Accumulated depreciation-plant & machinery Inventories Shares in Darren Ltd 125 600 (33 000) 18 700 110 000 $575 000 $131 300 Required A Prepare the acquisition analysis and BCVR entries of Ethan Ltd at 1 July 2018 Prepare the consolidation worksheet entries at 30 June 2019. Complete the consolidation worksheet at 30 June 2019. (Suggested template below) (10 marks) (10 marks) (10 marks) . 3 Consolidation Worksheet at 30 June 2019 Ethan Ltd Ethan Darren Adjustments Dr Group Ltd Ltd Cr 120 000 Profit before tax 12 500 (56 000) (4 200) Income tax expense Profit 64 000 8 300 Retained earnings (1/7/18) 80 000 36 000 Transfer from BCVR 144 000 44 300 (3 000) Transfer to general reserve Retained earnings (30/6/19) Share capital (0) 144 000 41 300 54 000 360 000 BCVR General reserve 10 000 3 000 98 300 514 000 Asset revaluation surplus (1/7/18) 18 000 13 500 5 000 Gains 2000 Asset revaluation surplus (30/6/19) 20 000 18 500 532 500 42 500 118 300 Liabilities 13 000 575 000 131 300 Land Plant & machinery Accum. depreciation Inventory 160 000 20 000 360 000 125 600 (33 000) (110 000) 55 000 18 700 Shares in Darren 110 000 0 575 000 131 300