On 1 July 2013 Donald Ltd acquired all of the share capital (cum div) of Duck Limited for a consideration of $600,000 cash and a brand that was held in their accounts at a fair value of $50,000. Duck Ltd reported a dividend payable of $8,000 at 1 July 2013.

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

 

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 30/12/16 for $90,000. The plant was on hand still at 30/6/17.

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

Share capital 420000

General reserve 90000

Retained earnings 70000

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.

 

ASSET Inventory Land Plant (less depn) Book Value Market Value 10,000 14,000 85,000 80,000 16,000 (2000) 14,000 19,000 Acounts Receivable 20,000 18,000