Exercise Three

Consolidation in a period subsequent to the acquisition of the subsidiary

Assume the same facts as in Exercise Two in which Alpha Ltd acquires all the shares in Beta Ltd for $$2000000$ on $30$ June $2019$ and this results in goodwill on acquisition amounting to $$80000$ Assume for this question that there is no tax to be paid and there are no inter$-$entity $($intragroup$)$ transactions.

The accounts for Alpha Ltd and Beta Ltd as at $30$ June $2020($one year after acquisition$)$ are as follows:

Reconciliation of Opening and Closing Retained Earnings

Beta Ltd