On 1 July 2021, Michael Scott Paper Company (MSPC) Ltd acquired all the issued shares (cum div.) of Dunder Mifflin Ltd for $450,000. At this date the equity of Dunder Mifflin Ltd consisted of: Share capital Retained earnings $250,000 75.000 On 1 July 2021, Dunder Mifflin Ltd had recorded a dividend payable of $22,500 which was paid in July 2021. All of the identifiable assets and liabilities of Dunder Mifflin Ltd were recorded at amounts equal to their fair values except for the following: Inventory Plant (accumulated depreciation of $90,000) Carrying amount $200,000 700,000 Fair value 260,000 750,000 Of the inventory on hand as at 1 July 2021, only 20% remained unsold by 30 June 2022. The plant on hand at the date of acquisition was expected to have a further useful life of 5 years. The companies in the group use the straight-line method of depreciation. The tax rate is 30%. During the 2021-22 year, the following transactions occurred: MSPC Ltd sold inventory to Dunder Mifflin Ltd for $60,000. This inventory had originally cost MSPC Ltd $50,000. Half of this inventory was still on hand as at 30 June 2022. MSPC Ltd charged Dunder Mifflin Ltd management fees of $15,000. This amount was unpaid at the end of the year. On 1 January 2022, MSPC Ltd sold machinery to Dunder Mifflin Ltd for $40,000, with a gain on sale of $6,000. The machinery was considered to have a further 5-year life. As at 30 June 2022, an impairment test was conducted on Dunder Mifflin Ltd and this resulted in the recognition of an impairment loss on the goodwill on acquisition of $5,000 (this has no tax effect). As at 30 June 2022, the directors of Dunder Mifflin Ltd declared a dividend of $2,500. This dividend remained unpaid at the end of the year. Required: i) ii) Prepare the acquisition analysis as at 1 July 2021. (8 marks) Prepare the journal entries necessary to prepare consolidated financial statements as at the date of acquisition. (12 marks) Prepare the journal entries necessary to prepare consolidated financial statements as at 30 June 2022. (20 marks) iii) On 1 July 2021, Michael Scott Paper Company (MSPC) Ltd acquired all the issued shares (cum div.) of Dunder Mifflin Ltd for $450,000. At this date the equity of Dunder Mifflin Ltd consisted of: Share capital Retained earnings $250,000 75.000 On 1 July 2021, Dunder Mifflin Ltd had recorded a dividend payable of $22,500 which was paid in July 2021. All of the identifiable assets and liabilities of Dunder Mifflin Ltd were recorded at amounts equal to their fair values except for the following: Inventory Plant (accumulated depreciation of $90,000) Carrying amount $200,000 700,000 Fair value 260,000 750,000 Of the inventory on hand as at 1 July 2021, only 20% remained unsold by 30 June 2022. The plant on hand at the date of acquisition was expected to have a further useful life of 5 years. The companies in the group use the straight-line method of depreciation. The tax rate is 30%. During the 2021-22 year, the following transactions occurred: MSPC Ltd sold inventory to Dunder Mifflin Ltd for $60,000. This inventory had originally cost MSPC Ltd $50,000. Half of this inventory was still on hand as at 30 June 2022. MSPC Ltd charged Dunder Mifflin Ltd management fees of $15,000. This amount was unpaid at the end of the year. On 1 January 2022, MSPC Ltd sold machinery to Dunder Mifflin Ltd for $40,000, with a gain on sale of $6,000. The machinery was considered to have a further 5-year life. As at 30 June 2022, an impairment test was conducted on Dunder Mifflin Ltd and this resulted in the recognition of an impairment loss on the goodwill on acquisition of $5,000 (this has no tax effect). As at 30 June 2022, the directors of Dunder Mifflin Ltd declared a dividend of $2,500. This dividend remained unpaid at the end of the year. Required: i) ii) Prepare the acquisition analysis as at 1 July 2021. (8 marks) Prepare the journal entries necessary to prepare consolidated financial statements as at the date of acquisition. (12 marks) Prepare the journal entries necessary to prepare consolidated financial statements as at 30 June 2022. (20 marks) iii)