On 1 July 2022, Donald Ltd acquired the remaining 60% of the issued shares of Mickey Ltd for shares in Donald Ltd with a fair value of $600 000. At that date, the financial statements of Mickey Ltd showed the following information.

Share capital$650 000

General reserve$20 000

Retained losses$50 000

All the assets and liabilities of Mickey Ltd were recorded at amounts equal to their fair values at the acquisition date, except some equipment recorded at $40 000 below its fair value with a related accumulated depreciation of $50 000. Assume the equipment has not been revalued in the subsidiaries accounts. Also, Donald Ltd identified at acquisition date a contingent liability related to a lawsuit where Mickey Ltd was sued by a former supplier and attached a fair value of $30 000 to that liability. The previous held interest by Donald Ltd in Mickey Ltd (ie 40% of the issued shares) was recognised by in Donald Ltd.'s accounts at the fair value at acquisition date of $400 000. Donald Ltd incurred $15 000 in acquisition related costs including $10 000 in share issue costs.

The Company tax rate is 30%.

Required:

1.Complete the acquisition analysis as at the date of acquisition. (10 marks)

2.Prepare the adjusting journal entries for the consolidation worksheet and the acquisition at 1 July 2022.(13.5 marks)

3.Complete the BCVR ledger account as at 1 July 2022.(1.5 marks)