On 1 July 2018, Acer Ltd acquired 70% of the share capital of Redmin Ltd for $660,000. At this date, the financial statements of Redmin Ltd included the following items: $ Retained Earnings 130,000 Share Capital 550,000 General Reserve 20,000 At 1 July 2018 all of the identifiable net assets of Redmin Ltd were recorded at fair value except for the following assets: Carrying amount Fair value $ Inventory 76,000 79,000 Machinery (cost $450,000) 300,000 320,000 Adjustments for differences between carrying amounts and fair values of assets at acquisition date are made on consolidation. During the year ended 30 June 2019, all inventory on hand at 1 July 2018 was sold. Machinery had a further ten-year life, with benefits expected to be received evenly over that time. On 1 June 2020, Redmin Ltd transferred $12,000 from the general reserve (pre-acquisition) to retained earnings. The income tax rate is 30% and the partial goodwill method is used by Acer Ltd. Required: 1. Prepare the acquisition analysis at 1 July 2018. (2 marks) 2. Prepare the business combination valuation entries and pre-acquisition entry at 30 June 2021. Note: NCI allocation journals are not required. (16 marks) 3. What is the amount that would be disclosed in the consolidated financial statements at 30 June 2021 for the Business Combination Revaluation Reserve and Investment in Redmin Ltd and explain why? (2 marks) On 1 July 2018, Acer Ltd acquired 70% of the share capital of Redmin Ltd for $660,000. At this date, the financial statements of Redmin Ltd included the following items: $ Retained Earnings 130,000 Share Capital 550,000 General Reserve 20,000 At 1 July 2018 all of the identifiable net assets of Redmin Ltd were recorded at fair value except for the following assets: Carrying amount Fair value $ Inventory 76,000 79,000 Machinery (cost $450,000) 300,000 320,000 Adjustments for differences between carrying amounts and fair values of assets at acquisition date are made on consolidation. During the year ended 30 June 2019, all inventory on hand at 1 July 2018 was sold. Machinery had a further ten-year life, with benefits expected to be received evenly over that time. On 1 June 2020, Redmin Ltd transferred $12,000 from the general reserve (pre-acquisition) to retained earnings. The income tax rate is 30% and the partial goodwill method is used by Acer Ltd. Required: 1. Prepare the acquisition analysis at 1 July 2018. (2 marks) 2. Prepare the business combination valuation entries and pre-acquisition entry at 30 June 2021. Note: NCI allocation journals are not required. (16 marks) 3. What is the amount that would be disclosed in the consolidated financial statements at 30 June 2021 for the Business Combination Revaluation Reserve and Investment in Redmin Ltd and explain why? (2 marks)