On 1 July 2019, John Ltd acquired all the issued shares of Wayne Ltd for $250,000. At this date, the financial statements of Wayne Ltd showed the following:

Share capital Retained earnings General ReserveTotal equity

$

170,000 30,500 4,800205,300

At acquisition date, all the net identifiable assets and liabilities in Wayne Ltd were recorded at amounts equal to their fair value except for:

Asset

Inventories

Plant (cost $400,000)

Carrying amount ($)

5,000 200,000

Fair Value ($)

8,000 210,000

The records also showed that the company had recorded existing goodwill of $5,000.

The Plant was calculated to have a further life of 5 years, and was depreciated on a straight- line basis. All inventory was sold by 30 June 2020.

Assume 30% tax rate Required:

1. (a)Prepare the acquisition analysis at 1 July 2019. (6 marks)
2. (b)Prepare the consolidation entries at acquisition date, 1 July 2019.Include narrations
3. for each entry.(15 marks)
4. (c)Prepare the consolidation worksheet as at 1 July 2019. (13 marks)
5. (d)Prepare Balance sheet for the reporting Group, James Ltd as at 1 July 2019 in
6. narrative format. (6 marks)