On 1 July 2016, Rock Ltd acquired (ex div.) all of the issued capital of Wallaby Ltd. The recorded equity of Wallaby Ltd at this date consisted of:

Share capital$120 000

General reserve25 000

Retained earnings55 000

At 1 July 2016, all the identifiable assets and liabilities of Wallaby Ltd were recorded at fair

value except for the following assets:

Carrying amount Fair value

Land $100000 $130000

Inventory 78500 86100

Machinery (cost $86000) 52000 56000

Vehicles (cost $58000) 47000 53000

Additionally, Wallaby Ltd's records showed a dividend payable at 1 July 2016 of $8000. This dividend was paid on 31 October 2016. The assets of Wallaby Ltd at acquisition date included goodwill recorded at $15 000 arising from a business combination transaction in 2012.

At 1 July 2016, Wallaby Ltd owned but had not recorded an internally generated brand name. This brand name was considered by Rock Ltd to have a fair value of $29 000 and an indefinite useful life. An impairment test conducted with respect to the brand name on 30 June 2019 concluded that its recoverable amount at that date was $2000 less than its carrying amount.

The vehicles and machinery were expected to have a further useful life of 6 and 8 years respectively, with benefits to be received evenly over those periods. Inventory on hand at 1 July 2016 was all sold by 31 January 2017. The land owned at 1 July 2016 was sold in September 2017 for $150 000. The machinery on hand at 1 July 2016 was sold on 1 January 2019 for $38 000.

Adjustments for the differences between carrying amounts and fair values of assets and liabilities on hand at acquisition date are recognised on consolidation. When assets are sold or derecognised, any related valuation reserves are transferred to retained earnings.

In June 2018, Wallaby Ltd paid a share dividend worth $20 000 from the general reserve on hand at 1 July 2016.

The trial balances of both companies at 30 June 2019 showed the following balances: