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Question 2 Auriga Ltd acquired all the shares of Perseus Ltd on 1 Jan 2013 when its equity consisted of: $100 000 Share capital Retained
Question 2 Auriga Ltd acquired all the shares of Perseus Ltd on 1 Jan 2013 when its equity consisted of: $100 000 Share capital Retained earnings 35 000 At 1 Jan 2013, all the identifiable assets and liabilities of Perseus Ltd were recorded as fair value except for: Carrying amount Fair Value Inventory $ 18 000 $ 22 000 Land 120 000 130 000 Plant (cost $120 000) 95 000 98 000 The inventory was all sold by 31 Dec 2013. The plant had a further 5- year life but was sold on 1 July 2015 for $50 000. The land was sold in March 2013 for $150000. At 1 Jan 2013, Perseus Ltd had guaranteed a loan taken out by Swede Ltd. Persues Ltd had not recognised a liability in relation to the guarantee. However as Swede Ltd was not performing well, Auriga Ltd valued a guarantee liability at $5000. In June 2015, Swede Ltd repaid the loan. Perseus Ltd had also invented a special tool and patented the process. No asset was recorded by Perseus Ltd, but Auriga Ltd valued the patent at $6000, with an expected useful life of 6 years. Tax rate is 30%.
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