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On 1 January 2 0 2 2 , Kiama Ltd acquired all the share capital of Gerringong Ltd for $ 3 0 0 0 0
On January Kiama Ltd acquired all the share capital of Gerringong Ltd for $ The equity of Gerringong Ltd at
January was as follows.
Share capital
Retained earnings
General reserve
At this date, all identifiable assets and liabilities of Gerringong Ltd were recorded at fair value.
On May Gerringong Ltd transferred $ from the general reserve preacquisition to retained earnings. The income
tax rate is
The following information has been provided about transactions between the two entities.
a The beginning and ending inventories of Kiama Ltd and Gerringong Ltd in relation to the current period ended on
December included the following inventories transferred intragroup.
Kiama Ltd sold inventories to Gerringong Ltd during the current period for $ This was $ above the cost of the
inventories to Kiama Ltd Gerringong Ltd sold inventories to Kiama Ltd in the current period for $ recording a pretax
profit of $
b Kiama Ltd sold an inventories item to Gerringong Ltd on July for use as machinery. The item cost Kiama Ltd $
and was sold to Gerringong Ltd for $ Gerringong Ltd depreciated the item at a rate of pa on cost
c On December Gerringong Ltd owes Kiama Ltd $ for items sold on credit.
d Gerringong Ltd undertook an advertising campaign for Kiama Ltd during the period ended December Kiama Ltd
was charged and paid $ to Gerringong Ltd for this service.
e Kiama Ltd received dividends totalling $ during the current period ended December from Gerringong Ltd
These dividends were declared in the current period out of postacquisition profits.
Required
Prepare the business combination valuationsontriesand preacquisition entriesat December
Prepare the consolidation worksheet journal entries to eliminate the effects of intragroup transactions at December
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