Pokhrel, Wish Question 1 (25 marks) 1/11 On 1 July 2019 Parent Ltd acquired all the issued share capital of Subsidiary Ltd (Sub Ltd) giving in exchange 100 000 shares in Parent Ltd, these having a fair value of $5 per share. At the acquisition date, the statements of financial position of Parent Ltd and Sub Lid, and the fair values of Sub Ltd's assets and liabilities, were as follows: Parent Ltd Carrying amount Sub L Carrying Fair amount value EQUITY AND LIABILITIES Equity Share capital Retained earnings $550000 $300 000 350 000 Total equity Liabilities Provisions 140000 900 000 440 000 30000 60000 $60000 Payables 27 000 34 000 34000 Tax liabilities 10000 6000 6000 Total liabilities 67 000 100000 Total equity and liabilities $967 000 $540000 ASSETS Land $120000 $150000 170000 Equipment 620000 480000 330 000 Accumulated depreciation (380000) (170000) Shares in Sub Ltd 500000 Pohbret, Manish Tax Bab Bition 10000 Total Babilities 67000 Total equity and Babilities 967 000 6000 100000 $540000 8000 ASSETS Land Equipment Accumulated depreciation Shares In Sub Ltd $120000 620000 (380 000) 500000 $150.000 480 000 170000 330 000 Inventory Cash Total assets (170000) 92.000 75000 80000 15000 5000 5000 967 000 $540000 At the acquisition date, Sub Ltd. has an unrecorded patent with a fair value of $20 000 and a contingent liability with a fair value of $15 000. This contingent liability relates to a loan guarantee made by Sub Ltd which did not recognise a liability in its records because it did not consider it could reliably measure the liability. The tax rate is 30%. Q1(a) Prepare an acquisition analysis. (15 marks) H= B I AXX 2 66 X DEX nation Counting Final Exam 0 0 O Pokhrel, Manish guarantee made by Sub Ltd which did not recognise a liability in its records because it did not 112 Time Remaining show consider it could reliably measure the liability. The tax rate is 30%. Q1(a) Prepare an acquisition analysis. (15 marks) H&M - B I x. x" EX Unanswered Q1(b) Record the business combination valuation journal entries. (10 marks) H-=- B I A x x 9.66 X B Sa