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

Additional Information

1. On 1 Jan 2017 Duck Ltd sold inventory to Donald Ltd costing $60,000 for $75,000. Half of this inventory was sold to outside parties for $30,000 by 30/6/17 2. On 1 Jan 2016 Duck Ltd sold inventory costing $9000 to Donald Ltd for $16,000. Donald Ltd treats the item as equipment and depreciates it at 10% per annum.

3. On 1 July 2016 Duck sold plant to Donald for $21,000. The plant had cost Duck $24,000 on 1 July 2014 and it was being depreciated at 10% per annum. Donald regards the plant as inventory. The inventory was all sold by 30th July 2016. 4. At 1 July 2016 Duck Ltd held inventory that it had purchased from Donald Ltd on 1 June 2016 at a profit of $9000. All inventory was sold by 30 June 2017.

5. Donald Ltd accrues dividends from Duck Ltd once they are declared. 6. Donald Ltd has earned $1200 in interest revenue in the 2017 financial year from Duck Ltd.

7. Donald Ltd has earned $3800 in service revenue in the 2017 financial year from Duck Ltd.

8. 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.

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