Question 19.8Business combination valuation entries, pre-acquisition entries subsequent to acquisition

LO5Robert Ltd acquired all the issued shares (cum div.) of Matt Ltd on 1 July 2015. At this date the financial position of Matt Ltd was as follows:

Plant	$200 000	$176 400
Accumulated depreciation	(25 600)
Goodwill	4 800
Receivables	15 200	15 200
Cash	5 000	5 000
Inventory	15 000	19 000
	214 400
Share capital: 120 000 shares	120 000
General reserve	23 200
Retained earnings	44 000
Provisions	19 200	19 200
Dividend payable	8 000	8 000
	214 400

The assets of Matt Ltd did not include a patent that was valued by Robert Ltd at $10 000. Its useful life was considered to be 5 years, with benefits being received equally over that period. The plant was considered to have a further 10-year life and is depreciated on a straight-line basis. All the inventory was sold by 30 June 2016. The goodwill on hand at 1 July 2015 was written off as the result of an impairment test conducted in June 2017. The dividend on hand at 1 July 2015 was paid in August 2015.

In exchange for the shares in Matt Ltd, Robert Ltd gave the following consideration:

• 50 000 shares in Robert Ltd, each share having a fair value of $2.00 per share.
• Cash of $40 000.
• Artworks having a fair value of $60 000.

Robert Ltd incurred legal and accounting costs of $5000 and share issue costs of $4000.

In January 2019, Matt Ltd paid a bonus dividend of $40 000, being one share for every three shares held, the dividend being paid from retained earnings on hand at 1 July 2015.

The tax rate is 30%.

Required

Prepare the consolidation worksheet entries for consolidated financial statements prepared by Robert Ltd at 30 June 2020.