On 1 July 2015, Square Ltd acquired all of the issued shares of Circle Ltd for $2,700,000 cash. Circle Ltd's shareholders' equity on 1 July 2015 consisted of the following: Issued capital Retained earnings Total shareholders' equity $1,200,000 850,000 $2,050,000 At 1 July 2015, all of Circle Ltd's net assets were recorded at fair value, except for the following items: Fair Value $ Land Plant & Equipment Internally generated brand name Carrying amount $ 500,000 187,500 0 700,000 307,500 250,000 The land was purchased by Circle Ltd on 1 January 2010 for $500,000. The plant and equipment was purchased by Circle Ltd on 1 July 2013 for $250,000. On 1 July 2013 the plant and equipment had an estimated useful life of 8 years with a zero salvage value. Circle Ltd is depreciating the asset straight-line over its useful life. There is no change to the estimated useful life of the plant and equipment at acquisition date The unrecorded brand name refers to the value to the group of Circle Ltd's internally generated Shapes' brand, which is now a market leader. At 1 July 2015, the brand name had an estimated useful life of 10 years (zero residual) and is amortised straight-line across that period. Both Square Ltd and Circle Ltd use the cost model for the valuation of assets, so any fair value adjustments must be completed as consolidation adjustments. The directors of Square Ltd believe that the goodwill relating to the acquisition of Circle Ltd has been impaired by $50,000 during the year ended 30 June 2018. This is the first impairment of this goodwill since acquisition date. No further impairment of intangible assets occurred during the year ended 30 June 2018. No dividends were paid or declared by Circle Ltd during year ended 30 June 2018. The company income tax rate is 30%. On 1 July 2015, Square Ltd acquired all of the issued shares of Circle Ltd for $2,700,000 cash. Circle Ltd's shareholders' equity on 1 July 2015 consisted of the following: Issued capital Retained earnings Total shareholders' equity $1,200,000 850,000 $2,050,000 At 1 July 2015, all of Circle Ltd's net assets were recorded at fair value, except for the following items: Fair Value $ Land Plant & Equipment Internally generated brand name Carrying amount $ 500,000 187,500 0 700,000 307,500 250,000 The land was purchased by Circle Ltd on 1 January 2010 for $500,000. The plant and equipment was purchased by Circle Ltd on 1 July 2013 for $250,000. On 1 July 2013 the plant and equipment had an estimated useful life of 8 years with a zero salvage value. Circle Ltd is depreciating the asset straight-line over its useful life. There is no change to the estimated useful life of the plant and equipment at acquisition date The unrecorded brand name refers to the value to the group of Circle Ltd's internally generated Shapes' brand, which is now a market leader. At 1 July 2015, the brand name had an estimated useful life of 10 years (zero residual) and is amortised straight-line across that period. Both Square Ltd and Circle Ltd use the cost model for the valuation of assets, so any fair value adjustments must be completed as consolidation adjustments. The directors of Square Ltd believe that the goodwill relating to the acquisition of Circle Ltd has been impaired by $50,000 during the year ended 30 June 2018. This is the first impairment of this goodwill since acquisition date. No further impairment of intangible assets occurred during the year ended 30 June 2018. No dividends were paid or declared by Circle Ltd during year ended 30 June 2018. The company income tax rate is 30%