On 1 July 2021, Atlantic Ltd acquired 100% of the share capital of Pacific Ltd for a cash consideration of 5930,000. All identifiable assets and liabilities of Pacific Ltd were recorded at amounts equal to fair value, except as follows: Carrying Fair amount value Inventory $20,000 $40,000 Plant (cost $150,000 $300,000) $180,000 On 1 July 2021, the equity of Pacific Ltd consisted of. Share capital $500,000 Retained earnings $400.000 Additional information: The following intragroup transactions took place between Atlantic Ltd and Pacific Ltd during the financial year ended 30 June 2022 1. On 1 December 2021, Atlantic Ltd sold inventory to Pacific Ltd for $14,000, paid in cash. The original cost to Atlantic Ltd of this inventory was 58,000. By 30 June 2022, 70% of these goods had been sold by Pacific Ltd to external parties, the rest is still on hand. 2. On 31 December 2021, Pacific Ltd paid a $10,000 interim dividend. 3. Atlantic Ltd provided management services to Pacific Ltd during the period ended 30 June 2022. The total charge for those services was $30,000, and Pacific Ltd has not paid that amount as of 30 June 2022 The tax rate is 30%. Required a) Prepare the acquisition analysis at 1 July 2021. (5.5 marks) b) Prepare the business combination valuation entries in the consolidation journal of Atlantic Ltd's group at 1 July 2021. Exclude journal narrations. (5.5 marks) c) Prepare the pre-acquisition entries in the consolidation journal of Atlantic Ltd's group at 1 July 2021. Exclude journal narrations. (4 marks) d) Prepare the entries to eliminate the effects of intragroup transactions in the consolidation journal of Atlantic Ltd's group at 30 June 2022. Exclude journal narrations. (8.5 marks) e) Assume now Atlantic Ltd acquired only 80% of the share capital of Pacific Ltd for a cash consideration of $800,000 on 1 July 2021. The fair value of the non-controlling interests (NCI) is $190.000 With all other condition unchanged, prepare the acquisition analysis at 1 July 2021 using the full goodwill method including showing the proportion of goodwill of Pacific Ltd and control premium. (9.5 marks) On 1 July 2021, Atlantic Ltd acquired 100% of the share capital of Pacific Ltd for a cash consideration of 5930,000. All identifiable assets and liabilities of Pacific Ltd were recorded at amounts equal to fair value, except as follows: Carrying Fair amount value Inventory $20,000 $40,000 Plant (cost $150,000 $300,000) $180,000 On 1 July 2021, the equity of Pacific Ltd consisted of. Share capital $500,000 Retained earnings $400.000 Additional information: The following intragroup transactions took place between Atlantic Ltd and Pacific Ltd during the financial year ended 30 June 2022 1. On 1 December 2021, Atlantic Ltd sold inventory to Pacific Ltd for $14,000, paid in cash. The original cost to Atlantic Ltd of this inventory was 58,000. By 30 June 2022, 70% of these goods had been sold by Pacific Ltd to external parties, the rest is still on hand. 2. On 31 December 2021, Pacific Ltd paid a $10,000 interim dividend. 3. Atlantic Ltd provided management services to Pacific Ltd during the period ended 30 June 2022. The total charge for those services was $30,000, and Pacific Ltd has not paid that amount as of 30 June 2022 The tax rate is 30%. Required a) Prepare the acquisition analysis at 1 July 2021. (5.5 marks) b) Prepare the business combination valuation entries in the consolidation journal of Atlantic Ltd's group at 1 July 2021. Exclude journal narrations. (5.5 marks) c) Prepare the pre-acquisition entries in the consolidation journal of Atlantic Ltd's group at 1 July 2021. Exclude journal narrations. (4 marks) d) Prepare the entries to eliminate the effects of intragroup transactions in the consolidation journal of Atlantic Ltd's group at 30 June 2022. Exclude journal narrations. (8.5 marks) e) Assume now Atlantic Ltd acquired only 80% of the share capital of Pacific Ltd for a cash consideration of $800,000 on 1 July 2021. The fair value of the non-controlling interests (NCI) is $190.000 With all other condition unchanged, prepare the acquisition analysis at 1 July 2021 using the full goodwill method including showing the proportion of goodwill of Pacific Ltd and control premium. (9.5 marks)
