Leather Limited acquired 100% of the share capital of Vinyl Limited for $235000. Vinyl had total shareholder's equity of $200000. The book values of Vinyl Limited's assets were: buildings $150000, machinery $80000. The fair values of these assets were: buildings $180000, machinery $90000. Also, Vinyl Limited has not previously recorded an internally generated trademark with a fair value of $40 000 and a contingent liability related to a warranty with a fair value of $10000. The tax rate is 30%. The acquisition analysis will determine: a. a goodwill of $35000. b. a gain on bargain purchase of $14000. c. a goodwill of $14000. d. a gain on bargain purchase of $21000. On 1 July 2019 Debbie Ltd acquired a 100\% interest in Stefan Ltd. At that date Stefan Ltd had goodwill of $6000 recorded in its statement of financial position as a result of a previous business combination. The total goodwill arising on Debbie's acquisition of Stefan was $16000. The goodwill to be recognised on consolidation as a result of Debbie's acquisition of Stefan is: a. nil. b. $7000. c. $6000. d. $10000. During the consolidation process, it may be necessary to make which of the following adjustments to the individual statements? a. business combination valuation entries only. b. business combination valuation entries and pre-acquisition entries in the individual journals of the parent and the subsidiaries. c. pre-acquisition entries only. d. business combination valuation entries and pre-acquisition entries in the consolidation worksheet. In the case of a wholly owned subsidiary, if the fair value of the consideration transferred plus the fair value of the previously held interest is greater than the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary: a. the difference is treated as a special equity reserve in the acquirer's accounting records. b. goodwill has been purchased and must be recognised on consolidation. c. the difference is immediately charged to profit or loss in the period in which the business combination occurred. d. a gain on bargain purchase results. Oceania Limited acquired 100% of the share capital of Broadwater Limited. Broadwater had total shareholder's equity of $250000. The book values of Broadwater Limited's assets were: buildings $150000, machinery $90000. The fair values of these assets were: buildings $180000, machinery $100000. The tax rate is 30%. The fair value of the identifiable net assets is: a. $278000 b. $210000 c. $280000 d. $222222 The acquisition analysis calculates the fair value of the net identifiable assets and liabilities acquired based on the book value of the pre-acquisition equity of the subsidiary, adjusted for the following: a. all of the options are correct b. fair value adjustments for the assets and liabilities that were recorded in the subsidiary's accounts at acquisition date based on carrying amounts different from fair value c. previously recorded goodwill in the subsidiary at acquisition date d. the fair value of the assets and liabilities not recorded in the subsidiary's accounts at acquisition date On 1 July Walter Ltd acquired 100% of the share capital of Kristoff Ltd. At that date, the carrying amount of Kristoff Ltd's machinery was $300000. The fair value of the machinery on acquisition date was $330000. The company tax rate was 30%. What is the amount of the business combination valuation reserve that will be recognised on consolidation? a. $33000 b. $21000 c. $30000 d. $9000 The preparation of consolidated financial statements involves: a. adding together the financial statements of the parent and the subsidiaries. b. adjusting entries in the accounting records of the parent. c. together the financial statements of the investor and the associate. d. adjusting entries in the accounting records of the subsidiary. Which of the following statements regarding pre-acquisition entries prepared after acquisition date is incorrect? a. They are adjusted for transfers between post-acquisition equity accounts. b. They are adjusted for the changes in the investment account recognised by the parent in the subsidiary. c. They include the pre-acquisition entry prepared at acquisition date adjusted for the effects of all the transfers between pre-acquisition equity accounts and changes in the investment account up to the beginning of the current period. d. They reverse the transfers between pre-acquisition equity accounts and changes in the investment account that happen in the current period