On 1 July 2020, Hood Ltd acquired 75% of the issued shares of Robin Ltd for $375,000 when the equity of Robin Ltd consisted of:

Share Capital $200,000

Retained Earnings $75,000

Asset Revaluation reserve $25,000

At the acquisition date all the identifiable assets and liabilities of Robin Ltd were recorded at fair value except for the following assets:

Carrying amount Fair Value

Equipment (Cost $100,000) $80,000 $100,000

Land $280,000 $350,000

The NCI at acquisition date is measured based on the proportionate share of the identifiable assets and liabilities in Robin Ltd. The tax rate is 30%.

Required

Acquisition analysis as at 1 July 2020(6 Marks)

3. Which of the following statements is incorrect?

Select one:

Significant influence requires the investor to actually exercise its power over the investee

The assessment of the existence of significant influence requires judgement on the part of the accountants

The key criterion for identifying a joint arrangement is that the joint venturers have joint control over the joint venture

Significant influence requires the investor to have the power or capacity to participate in the investee's financial and operating policy decision

4.

Koala Ltd acquired 100% of the share capital of Dingo Ltd when the carrying value of Dingo Ltd.'s plant and machinery was $200 000. The fair value of the plant on acquisition date was $270 000. The company tax rate was 30%. What is the amount of the business combination valuation reserve that must be recognised on consolidation?

Select one:

$270 000

$49 000

$21 000

$70 000

A subsidiary sold inventories to its parent for $100 000. The inventories originally cost the subsidiary $80 000. At balance sheet date, the parent had sold 50% of the inventories to an external party. The company tax rate is 30%. Which of the following is the deferred tax item that is recognised on consolidation?

Select one:

Cr Deferred tax liability $6000

Cr Deferred tax liability $3000

Dr Deferred tax asset $3000

Dr Deferred tax asset $6000