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) Market Value 14,000 85,000 Book Value 10,000 80,000 16,000 (2000) 14,000 20,000 19,000 18,000 Acounts Receivable Trial Balances As at 30 June 2017 Donald Itd DR CR 0 1,247,100 788,000 161,000 17,000 3,500 9,300 4,000 Duck Ltd DR CR 952,500 456,000 72,000 8,000 4,800 5,600 6,000 7,000 5,000 7,000 5,600 1,200 5,500 97,120 118,480 190,820 61,280 10,000 12,000 3,000 2,500 Sales Revenue Cost of Sales Wages and Salaries Depreciation Expense Service Expense Interest Expense Other Expenses Gain on Sale of Non Current Asset Service Revenue Interest Revenue Dividend Revenue Income tax expense Retained Earnings 1/7/16 Dividend Paid Dividend Declared Share Capital General Reserve Other Equity 1/7/16 Gains on Financial Assets (OCI) Loan Payable to Tony Ltd Deferred Tax Liability Dividend Payable Shares in Claire Ltd Cash Inventories Other Current Assets Dividend Receivable Loan receivable from Claire Ltd Financial Assets Plant and Equipment Acc. Depreciation Plant Land 500,000 155,000 4,000 1,000 420,000 67,100 12,000 6,000 16,000 6,600 2,500 54,900 12,000 147,500 36,000 300,000 642,000 86,000 169,500 11,000 2,500 16,000 15,000 74,300 68,000 228,000 12,600 12,900 71,500 2,189,720 120,000 1,575,880 2,189,720 1.575.880 ASSET Inventory Land Plant (less depn) Market Value 14,000 85,000 Book Value 10,000 80,000 16,000 (2000) 14,000 20,000 19,000 18,000 Acounts Receivable Trial Balances As at 30 June 2017 Donald Itd DR CR 0 1,247,100 788,000 161,000 17,000 3,500 9,300 4,000 Duck Ltd DR CR 952,500 456,000 72,000 8,000 4,800 5,600 6,000 7,000 5,000 7,000 5,600 1,200 5,500 97,120 118,480 190,820 61,280 10,000 12,000 3,000 2,500 Sales Revenue Cost of Sales Wages and Salaries Depreciation Expense Service Expense Interest Expense Other Expenses Gain on Sale of Non Current Asset Service Revenue Interest Revenue Dividend Revenue Income tax expense Retained Earnings 1/7/16 Dividend Paid Dividend Declared Share Capital General Reserve Other Equity 1/7/16 Gains on Financial Assets (OCI) Loan Payable to Tony Ltd Deferred Tax Liability Dividend Payable Shares in Claire Ltd Cash Inventories Other Current Assets Dividend Receivable Loan receivable from Claire Ltd Financial Assets Plant and Equipment Acc. Depreciation Plant Land 500,000 155,000 4,000 1,000 420,000 67,100 12,000 6,000 16,000 6,600 2,500 54,900 12,000 147,500 36,000 300,000 642,000 86,000 169,500 11,000 2,500 16,000 15,000 74,300 68,000 228,000 12,600 12,900 71,500 2,189,720 120,000 1,575,880 2,189,720 1.575.880