Success Ltd is one of the main industry players in the food industry. In line with the expansion plan recently announced, Success Ltd has acquired 80% of the shares (ex div.) of Victory Ltd for $36,000 on 1 July 2019. At this date the equity of Victory Ltd consisted of Share capital $ 30,000 General reserve 3,000 Retained earnings 15,000 At the date of the business combination, all the identifiable assets and liabilities of Victory Ltd had carrying amounts equal to their fair values except for: Carrying amount Fair value Plant (cost $60 000) $40,000 $45,000 Inventory 25,000 26,000 Receivables 33,000 30,000 The plant had a further useful life of 5 years. It was sold to Bubble Ltd on 1 June 2020 for $50,000 As at 30 June 2020, a quarter the inventory was sold to entities outside the group. The balance was sold by 30 June 2021. The receivables of $30,000 had been collected by 30 June 2020. Additional information: (a) One of the liabilities of Victory Ltd at 1 July 2019 was dividend payable of $10,000. (b) On 1 July 2019, Victory Ltd also has a contingent liability of $8,000 resulting from a legal claim from a customer. The probability for Victory Ltd to win the case is assessed to be 70% In 2015, Victory Ltd acquired Shine Ltd and recorded goodwill on acquisition of $5,000. The tax rate is 30% The year-end for Success Ltd and Victory Ltd is 30 June (e) 1 Required Prepare the consolidation worksheet entries for the preparation of the consolidated financial statements of Success Ltd on 30 June 2021 in accordance with IFRS 3 AASB 3 Business Combinations and IFRS 10/AASB 10 Consolidated Financial Statements. Show all workings. Narrations for journal entries are required. Success Ltd is one of the main industry players in the food industry. In line with the expansion plan recently announced, Success Ltd has acquired 80% of the shares (ex div.) of Victory Ltd for $36,000 on 1 July 2019. At this date the equity of Victory Ltd consisted of Share capital $ 30,000 General reserve 3,000 Retained earnings 15,000 At the date of the business combination, all the identifiable assets and liabilities of Victory Ltd had carrying amounts equal to their fair values except for: Carrying amount Fair value Plant (cost $60 000) $40,000 $45,000 Inventory 25,000 26,000 Receivables 33,000 30,000 The plant had a further useful life of 5 years. It was sold to Bubble Ltd on 1 June 2020 for $50,000 As at 30 June 2020, a quarter the inventory was sold to entities outside the group. The balance was sold by 30 June 2021. The receivables of $30,000 had been collected by 30 June 2020. Additional information: (a) One of the liabilities of Victory Ltd at 1 July 2019 was dividend payable of $10,000. (b) On 1 July 2019, Victory Ltd also has a contingent liability of $8,000 resulting from a legal claim from a customer. The probability for Victory Ltd to win the case is assessed to be 70% In 2015, Victory Ltd acquired Shine Ltd and recorded goodwill on acquisition of $5,000. The tax rate is 30% The year-end for Success Ltd and Victory Ltd is 30 June (e) 1 Required Prepare the consolidation worksheet entries for the preparation of the consolidated financial statements of Success Ltd on 30 June 2021 in accordance with IFRS 3 AASB 3 Business Combinations and IFRS 10/AASB 10 Consolidated Financial Statements. Show all workings. Narrations for journal entries are required
