Question
On 1 July 2022 the equity of PQR Ltd consisted of share capital of $85 000 and retained earnings of $62 800. All the identifiable
On 1 July 2022 the equity of PQR Ltd consisted of share capital of $85 000 and retained earnings of $62 800. All the identifiable assets and liabilities of PQR Ltd were recorded at amounts equal to fair value except for:
| Carrying amount | Fair Value |
Brand | $70 000 | $82 000 |
Plant (cost $90,000) | 50 000 | 58 000 |
Inventories | 23 600 | 30 000 |
ABC Ltd acquired all the issued shares of PQR Ltd for $185 000 on 1 July 2022. The Brand was considered to have an indefinite life. It was estimated that the plant had a further life of 8 years, and was depreciated on a straight-line basis. All the inventories were sold by 30 June 2023.
In May 2023, PQR Ltd transferred $25 000 from the retained earnings on hand at 1 July 2022 to a general reserve. In June 2023, PQR Ltd conducted an impairment test on the Band and on the goodwill acquired. As a result, the goodwill was considered to be impaired by $5 000 and brand by $7 000.
The tax rate is 30%.
Required
- Prepare the acquisition analysis at 1 July 2022.
- Prepare the consolidation worksheet entries for ABC Ltds group at 1 July 2022.
- Prepare the consolidation worksheet entries for ABC Ltds group at 30 June 2023.
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