On 1 Jan 2009, Arteta Ltd acquired 70% of the share capital of Rosicky Ltd for $160,000. At this date, the equity of Rosicky Ltd consisted of:

Share capital General reserve Retained earnings

120 000 20 000 40 000

At the date of acquisition all assets and liabilities of Rosicky Ltd were carried in their accounting records at fair values with the exception of the following assets:

Carrying amount

Machinery (cost $100 000) 70 000 Land 90 000

Fair value

80 000 120 000

The Machinery had a further 5-year useful life as at the date of acquisition. The land was sold on 30 June 2011.

Additional information:

1. a)Included in the opening inventory of Rosicky Ltd as at 1 January 2011 were items purchased from Arteta Ltd prior to 31 December 2010 for $12,000. The original cost of these items was $9,000. All inventory was sold by Rosicky to external parties by 31 December 2011.
2. b)During the current year, Rosicky Ltd sold inventory to Arteta Ltd for $20,000. The inventory had cost Rosicky Ltd $15,000. Half of this inventory was still held by Arteta Ltd by the year end.
3. c)On 30 June 2010, Rosicky Ltd sold machinery to Arteta for $80,000. The machinery had cost Rosicky Ltd $100,000 and had a carrying amount of $60,000 at the date of transfer. The remaining useful life of the machinery at 30 June 2010 was 5 years.
4. d)Arteta Ltd uses the full goodwill method. The fair value of the non-controlling interest at the acquisition date was $66,000.
5. e)The tax rate is 30%.
6. f)The annual reporting date of Arteta group is 31 December.