Financial Accounting and Reporting ' Practical Exercise on 1 July 2013 Taylor Ltd acquired 80% of the issued shares of Durand Ltd for $222,720. At the date of acquisition, the shareholders' equity of Durand Ltd consisted of: share capital $200,000, general reserve $40,000 and retained earnings $20,000. All identifiable assets and liabilities of Durand are recorded at fair value at this date except for inventory for which the fair value was $4,000 greater than carrying amount, and the plant which has a carrying amount of $60,000 (with $16,000 accumulated depreciation) and a fair value of $68,000. The inventory was all sold by 30 June 2014 and the plant had a further 5-year useful life with depreciation based on the straight-line method. The tax rate is 30%.4 Additional information Goodwill had been impaired by 10% in the first year following the acquisition. During the year to 30 June 2017 it was considered that the goodwill had been further impaired by an amount of $800.* i. Durand Ltd holds debentures in Taylor Ltd amounting to $3,200. Taylor Ltd paid the 10% annual interest on debentures on 30 June 2017. ii. During the 2016-2017 period, Durand sold inventory to Taylor Ltd for $9,200, recording a profit before tax of $1,200. Taylor Ltd has sold half of these items to Sam Ltd. During the 2016-2017 period, Taylor Ltd sold inventory to Durand Ltd for $7,200, recording a profit before tax of $800. Durand Ltd has not sold any of the inventory to other entities.* The opening inventory of Taylor Ltd includes unrealised profit of $1,600 on inventory sold from Durand Ltd during the prior financial year. The inventory was all sold to an external entity by Taylor Ltd during the year ended 30 June 2017.* iv. v