Question
Sam Ltd purchased 97% of the issued shares(Ex div)of Rex Ltd for $879000 on 1 July 2019 when the equity of Rex Ltd was
Sam Ltd purchased 97% of the issued shares(Ex div)of Rex Ltd for $879000 on 1 July 2019 when the equity of Rex Ltd was as follows; Share capital Retained earnings General reserve 351600 263700 131850 At this date, Rex Ltd had not recorded any goodwill, and all identifiable assets and liabilities were recorded at fair value except for the followings; Account Inventories Land Equipment Contingent Liability Unrecorded Asset Unrecorded Asset Cost $102,500 Carrying Amount $26,400 $66,000 $82,000 Fair value $29,000 $73,000 $98,000 $11,000 $26,000 $20,000 Further 5 Rex Ltd identified at acquisition date a lawsuit where Rex Ltd was sued by a former supplier with the Fairvalue of: Rex Ltd had unrecorded and internally generated Patent with the FairValue of: Rex Ltd had unrecorded and internally generated in-process research and development with the FairValue of: 30% of inventory were sold by 30 June 2020. Further life of the assets are listed on the above table. Partial goodwill method is under use and Tax rate:30%.
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