Part B - Business combinations and Consolidation: wholly owned entities 'X' Ltd acquired all the issued shares (ex dividend) of 'Y' Ltd on 1 July 2017 for $24,600. At this date the equity of 'Y' Ltd consisted of the following. Share Capital General Reserve Retained Earnings $13,000 5,000 4,050 At the acquisition date all the identifiable assets and liabilities of 'Y' Ltd were recorded at amounts equal to the fair value except for the following. Plant (cost $23,000 Land Inventories Carrying amount $20,000 10,000 3,000 Fair value $21,000 12,000 3,800 The plant was considered to have a further 5-year life. The plant was sold for $15,500 on 1 January 2019. The land was sold on 1 February 2018 for $15,000. The inventories were all sold by 30 June 2018. Also, at acquisition date 'Y' Ltd had recorded a dividend payable of $700 and goodwill (net of accumulated impairment losses of $1,300) of $500. 'Y' Ltd had not recorded some internally generated brands that 'X' Ltd considered to have a fair value of $1,200. The brand was considered to have an indefinite life. Also not recorded by 'Y' Ltd was a contingent liability relating to a current court case in which 'Y' Ltd was involved and a supplier was seeking compensation. 'X' Ltd placed a fair value of $1,500 on this liability. This court case was settled in May 2019 at which time 'Y' Ltd was required to pay damages of $1,600. In February 2018, 'Y' Ltd transferred $2,000 from the general reserve on hand at 1 July 2017 to retained earnings. A further $1,500 was transferred in February 2019. Both companies have an equity account entitled 'Other components of equity' that recognise certain gains and losses from financial assets. At 1 July 2018, the balances of these accounts were $3,000 for 'X' Ltd and $1,500 for 'Y' Ltd. 1 The financial statements of the two companies at 30 June 2019 contained the following information. 'X' Limited 13,000 (7,000) 6,000 3,000 'Y' limited 6,400 (4,200) 2,200 800 Dividend paid 9,000 (2,000) 7,000 33,300 3,000 43,300 (2,000) 3,000 (500) 2,500 5,500 1,500 9,500 0 Retained earnings (30/6/19) Share capital General reserve Other component of Equity Total Equity 41,300 15,000 1,000 2,500 59,800 9,500 13,000 2,000 1,800 26,300 Accounts payable Deferred tax liability Other non-current liabilities Total liabilities 4,000 1,800 24,800 30,600 1,000 1,000 23,000 25,000 Total Equity and liabilities 90,400 51,300 43,000 (18,200) 15,000 8,000 24,600 11,000 1,000 4,000 2,000 0 90,400 38,800 (22,000) 20,000 0 0 10,500 500 3,000 1,800 (1,300) 51,300 Revenues Expenses Trading profit Gains (losses) on sale of non-current assets Profit before tax Income tax expense Profit for the period Retained Earnings (1/7/18) Transfer from General reserve Plant Accumulated Depreciation- Plant Land Brands Shares in 'Y' limited Financial Assets Cash Inventories Goodwill Accumulated Impairment Losses Total Assets Required 2 1. Prepare the acquisition analysis at 1 July 2017. (5 marks) 2. Prepare the consolidation worksheet entries for 'X' Ltd's group at 30 June 2019. (12 marks) 3. Prepare the consolidated worksheet for 'X' Ltd's group at 30 June 2019. (10 marks) Include the marking criteria sheet provided on page 6 of this assignment as the first page to your submitted assignment. Please fill in your student name(s) and ID(s). 3 Marking criteria sheet Student name(s) Student ID(s) Part B Marking Criteria Sheet Marks available 15 marks Requirement 1 5 Requirement 2 12 Requirement 3 10 Formatting instruction and marking criteria sheet 3 Part B Assignment Total 30 marks Part B Assignment: 15% weighting 15 marks Less: Late penalty (5% per day) Part B Assignment: Final mark 15 marks Additional comments from marker 4 Marks awarded