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On 1 July 2015 Sarah Ltd acquires all the shares in Jane Ltd for $535,000 cash The financial statements of Jane Ltd as at 1

On 1 July 2015 Sarah Ltd acquires all the shares in Jane Ltd for $535,000 cash

The financial statements of Jane Ltd as at 1 July 2015 shows the following:

Retained earnings 207,000

Share capital 220,000

The tax rate is 30%

At the date of acquisition all the net assets of Jane Ltd are at fair value except for the following:

Carrying amount

Fair value

Inventory

$101,000

$134,000

Internally-generated brand name

Nil

$81,000

Contingent liabilities

Nil

$316,000

Assume the brand name is assessed to have a useful life of 37 years. The whole process of consolidation adjustments are listed below:

Acquisition analysis:

Purchase Consideration:

$ xxx

Less fair value of identifiable net assets:

FVA

$ xxx

Share capital

$ xxx

Retained earnings

$ xxx

($ xxx)

Goodwill on acquisition

$ xxx

The consolidation adjustment required to eliminate the investment asset at 30 June 2023 is as below:

Dr. Share capital

$ xxx

Dr. Retained earnings

$ xxx

Dr. FVA

$ xxx

Dr. Goodwill

$ xxx

Cr. Investment in Jane Ltd

$ xxx

The consolidation adjustment required for the group to record the FVA entries for the three asset or liability accounts on behalf of Jane Ltd. (subsidiary) at 30 June 2023 are shown as the following:

Dr. Inventory

$ xxx

Cr. FVA

$ xxx

Cr. DTL

$ xxx

Dr. Brand name

$ xxx

Cr. FVA

$ xxx

Cr. DTL

$ xxx

Dr. FVA

$ xxx

Dr. DTA

$ xxx

Cr. Contingent liability

$ xxx

The additional consolidation adjustment entry in related to the brand name is shown below:

Dr. Retained earnings

$ xxx

Dr. Amortisation expense

$ xxx

Cr. Accumulated amortisation

$ xxx

Dr. Deferred tax liability

$ xxx

Cr. Income tax expense

$ xxx

Cr. Retained earnings

BBB

What is the balance of retained earnings (part of tax effect) marked as BBB above?

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