On 1 July 2013 Brad Ltd acquired all of the share capital (cum div)of Betty Limited for a consideration of $500,000 cash and a patent with a fair value of $50,000 At the date of acquisition Betty's accounts showed a dividend payable of $5,000 At the acquisition date, all the identifiable assets and liabilities were recorded at fair value with the exception of Asset book value market value Inventory 12000 13000 land 95000 110000 Plant 17000 (less depn) 2000 15000 19000 Acc Receivable 35000 33000 Betty disclosed a contingent liability for legal expenses in the notes to the accounts Brad valued the contingent liability at $8000 The inventory was all sold by 30 6 14 The remaining useful life of the plant is 5 years The accounts receivable were collected by 30 6 14 for $18,000 The land was sold on 30 12 15 for $120,000 The plant was on hand still at 30 6 17 On 1 6 17 the contingent liability for legal expenses was settled for $5000 At the date of acquisition the equity of Betty Ltd consisted of Share Capital 440,000 General Reserve 85,000 Retained Earnings 75,000 Additional Information On 1 Jan 2017 Brad Ltd sold inventory to Betty Ltd costing $80,000 for $90,000 75 of this inventory was sold to outside parties by 30 6 17 On 1 Jan 2016 Brad Ltd sold inventory costing $12000 to Betty Ltd for $14,000 Betty Ltd treats the item as equipment and depreciates it at 10 per annum On 1 July 2016, Brad sold the plant to Betty for $22,000 The plant had cost Brad $30,000 on 1 July 2014 and it was being depreciated at 10 per annum Betty regards the plant as inventory The inventory was all sold by 30th July 2016 On 1 July 2016 Brad Ltd held inventory that it had purchased from Betty Ltd on 1 June 2016 at a profit of $8000 All inventory was sold by 30 June 2017 Brad Ltd accrues dividends from Betty Ltd once they are declared Betty Ltd has earned $4000 in interest revenue in the 2017 financial year from Brad Ltd Betty Ltd has earned $6000 in service revenue in the 2017 financial year from Brad Ltd Assume a tax rate of 30 Required A Prepare the acquisition analysis at 1 July 2013 B Prepare the BCVR and pre acquisition journal entries at 1 July 2013 C Prepare the BCVR and pre acquisition journal entries at 30 June 2017 D Prepare the consolidation worksheet journal entries to eliminate the effects of inter entity transactions as at 30 June 2017

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On 1 July 2013 Brad Ltd acquired all of the share capital (cum div)of Betty Limited for a consideration of $500,000 cash and a patent

On 1 July 2013 Brad Ltd acquired all of the share capital (cum div)of Betty Limited for a consideration of $500,000 cash and a patent with a fair value of $50,000. At the date of acquisition Betty's accounts showed a dividend payable of $5,000.

At the acquisition date, all the identifiable assets and liabilities were recorded at fair value with the exception of:

Asset book value market value

Inventory 12000 13000

land 95000 110000

Plant 17000

(less depn) 2000

15000 19000

Acc Receivable 35000 33000

Betty disclosed a contingent liability for legal expenses in the notes to the accounts. Brad valued the contingent liability at $8000.

The inventory was all sold by 30/6/14. The remaining useful life of the plant is 5 years.

The accounts receivable were collected by 30/6/14 for $18,000.

The land was sold on 30/12/15 for $120,000. The plant was on hand still at 30/6/17.

On 1/6/17 the contingent liability for legal expenses was settled for $5000.

At the date of acquisition the equity of Betty Ltd consisted of:

Share Capital 440,000

General Reserve 85,000

Retained Earnings 75,000

Additional Information

On 1 Jan 2017 Brad Ltd sold inventory to Betty Ltd costing $80,000 for $90,000. 75% of this inventory was sold to outside parties by 30/6/17.
On 1 Jan 2016 Brad Ltd sold inventory costing $12000 to Betty Ltd for $14,000. Betty Ltd treats the item as equipment and depreciates it at 10% per annum.
On 1 July 2016, Brad sold the plant to Betty for $22,000. The plant had cost Brad $30,000 on 1 July 2014 and it was being depreciated at 10% per annum. Betty regards the plant as inventory. The inventory was all sold by 30th July 2016.
On 1 July 2016 Brad Ltd held inventory that it had purchased from Betty Ltd on 1 June 2016 at a profit of $8000. All inventory was sold by 30 June 2017
Brad Ltd accrues dividends from Betty Ltd once they are declared.
Betty Ltd has earned $4000 in interest revenue in the 2017 financial year from Brad Ltd.
Betty Ltd has earned $6000 in service revenue in the 2017 financial year from Brad Ltd.
Assume a tax rate of 30%.

Required:

A. Prepare the acquisition analysis at 1 July 2013.

B. Prepare the BCVR and pre-acquisition journal entries at 1 July 2013.

C. Prepare the BCVR and pre-acquisition journal entries at 30 June 2017.

D. Prepare the consolidation worksheet journal entries to eliminate the effects of inter-entity transactions as at 30 June 2017.