Question 2

XYZ Ltd acquires 100 per cent of Red-X Ltd on 1 July 2021. XYZ Ltd pays the shareholders of Red-X Ltd the following consideration:

Cash	70 000
Plant and equipment	fair value $250 000; carrying amount in the books of ABC Ltd $170 000
Land	fair value $300 000; carrying amount in the books of ABC Ltd $200 000

There are also legal fees of $190 000 involved in acquiring Red-X Ltd.

On 1 July 2021 Red-X Ltd's statement of financial position shows total assets of $300 000 and liabilities of $3000 000. The fair value of the assets is $800 000.

Required:

Has any goodwill been acquired and, if so, how much? And discuss the potential for including associated legal fees into the cost of acquiring Red-X using appropriate accounting standards.

Q4

Discuss (Using Australian accounting standard) If a decision is made to abandon an area of interest, how should any pre-production costs in respect of that area be treated? Explain, what costs should be included in the cost of inventory of an entity involved in the extractive industries.

Question 5

Pearson Ltd is an Australian listed company. Its results for the financial year ending 30 June 2023 have exceeded expectationsprofit before tax is $11.194 million and income tax expense is $2.216 million. As at 30 June 2022, there were 11.700 million ordinary shares on issue. On 11 May 2023, 4.225 million further ordinary shares were issued at a price of $2.99paid to $2.4. The partly paid shares carry rights to dividends in proportion to the amount paid relative to the total issue price.

Required:

Calculate the basic EPS for Pearson Ltd for the year ending 30 June 2023.