question:

(a) ONYA acquired Remit for $120 million cash on 1 January 2019. Using the information provided, prepare an acquisition analysis clearly showing the amount of goodwill arising on the acquisition. Where relevant you should refer to Australian Accounting Standards and/or relevant professional guidance or research literature.

(b) Briefly discuss the initial recognition and subsequent accounting treatment of the intangible assets, including goodwill, acquired by ONYA in the Remit acquisition. Where relevant you should refer to Australian Accounting Standards and/or relevant professional guidance or research literature.

(c) Prepare in good form a consolidated Statement of Financial Position for the ONYA Group including Remit, at 1 January 2019 (immediately after the acquisition).

ONYA Ltd (ONYA) is a cloud based business management solutions provider. First listed on the Australian Securities Exchange (ASX) in 2014, ONYA recorded a healthy annual profit in the last financial year, boosted by increased online subscriber growth. At ONYA's January 2019 board meeting CEO James Dunn outlined details of a recent new acquisition. The acquisition is an Australian company, Remit Pty Ltd (Remit), which is an Australian payments solutions provider. Remit has more than 8,000 clients across Australia, including banks and businesses of various sizes. The acquisition of Remit will allow ONYA to bridge a gap between its accounting and payments solutions and will potentially open up an $1600 million accounting software payment market to ONYA. The acquisition was via a sale and purchase agreement to acquire 100% of Remit for $120 million cash. The ONYA board were generally positive about the acquisition and much of the boardroom discussion focused on the value-add of Remit to ONYA's existing business. However, several of ONYA's directors expressed concern about the nature and amount of the assets involved in the Remit acquisition as the most recent financial statements for Remit indicated that ONYA was paying $120 million for net assets with a carrying value of just over $8 million. ONYA's CFO Wendy Patton was asked about this issue and about the impact of the acquisition on ONYA's financial statements. Wendy replied that Remit controlled significant intangible assets that it was not permitted to recognise in its own financial statements but that the ONYA Group should recognise in a business combination. Wendy agreed to provide pro-forma (projected) financial statements and supporting calculations to the board to demonstrate the estimated effect of the Remit acquisition. You commenced working at ONYA as a graduate accountant a year ago. After the board meeting, Wendy Patton sends for you and asks that you help to prepare detailed responses for the board. Wendy provides you with some data and the most recent Statements of Financial Position for ONYA and for Remit. The following information is also relevant: ONYA is the ultimate parent of a pre-existing group at 1 January 2019. Remit is not a member of a group. ONYA and its subsidiaries have not adopted tax consolidation. There are no intra-group sales or dividends. Both the ONYA Group and Remit have a 31 December financial year end. Remit's recorded net assets are stated at fair value. Assume that the financial statement excerpts provided are reasonable estimates of the acquisition date financial statements of both companies just prior to the acquisition. Initial due diligence undertaken by ONYA indicates that in addition to the recorded assets and liabilities, Remit also controls the following unrecognised identifiable intangible assets: a. Customer relationships with an estimated fair value at 1 January 2019 of $37,200,000. Estimated economic life is 10 years. b. Commercialised software with an estimated fair value at 1 January 2019 of $ 16,000,000. Estimated economic life is 5 years. C. Brand name (Remit) with an estimated fair value at 1 January 2019 of $4,800,000. Estimated economic life is 5 years. The corporate tax rate is 30%. Statements of Financial Position: ONYA Ltd Group Consolidated Statement of Financial Position as at 31 December 2018 Current Assets: ($000) Cash and cash equivalents 142,864 Trade and other receivables 29132 Inventories 432 Total Current Assets 172,428 Non-Current Assets: Receivables 4,796 Equity accounted investments 15,328 Property, plant and equipment (net) 37,552 Intangible assets 2,328,644 Total Non-Current Assets 2,386,320 Total Assets 2,558,748 39,376 976 104,688 26,442 171,482 Current Liabilities: Trade and other payables Borrowings Unearned revenue Provisions Total Current Liabilities Non-Current Liabilities: Borrowings Provisions Total Non-Current Liabilities Total Liabilities Net Assets 1,002,900 25,930 1,028,830 1,200,312 1,358,436 Shareholders' Equity: Issued capital Retained profits General reserve Total Shareholders' Equity 2,016,200 (760,764) 103,000 1,358,436 Remit Pty Ltd Statement of Financial Position as at 31 December 2018 Current Assets: Cash and cash equivalents Accounts Receivable Prepayments Total Current Assets Non-Current Assets: Property, plant and equipment (net) Total Non-Current Assets Total Assets ($000) 8,564 3,400 2,000 13,964 254 254 14,218 Current Liabilities: Accounts payable Tax payable Total Current Liabilities Total Liabilities 4,680 1240 5,920 5,920 Net Assets 8,298 Shareholders' Equity: Issued capital Retained profits General reserve Total Shareholders' Equity 4,000 3,258 1,040 8,298 ONYA Ltd (ONYA) is a cloud based business management solutions provider. First listed on the Australian Securities Exchange (ASX) in 2014, ONYA recorded a healthy annual profit in the last financial year, boosted by increased online subscriber growth. At ONYA's January 2019 board meeting CEO James Dunn outlined details of a recent new acquisition. The acquisition is an Australian company, Remit Pty Ltd (Remit), which is an Australian payments solutions provider. Remit has more than 8,000 clients across Australia, including banks and businesses of various sizes. The acquisition of Remit will allow ONYA to bridge a gap between its accounting and payments solutions and will potentially open up an $1600 million accounting software payment market to ONYA. The acquisition was via a sale and purchase agreement to acquire 100% of Remit for $120 million cash. The ONYA board were generally positive about the acquisition and much of the boardroom discussion focused on the value-add of Remit to ONYA's existing business. However, several of ONYA's directors expressed concern about the nature and amount of the assets involved in the Remit acquisition as the most recent financial statements for Remit indicated that ONYA was paying $120 million for net assets with a carrying value of just over $8 million. ONYA's CFO Wendy Patton was asked about this issue and about the impact of the acquisition on ONYA's financial statements. Wendy replied that Remit controlled significant intangible assets that it was not permitted to recognise in its own financial statements but that the ONYA Group should recognise in a business combination. Wendy agreed to provide pro-forma (projected) financial statements and supporting calculations to the board to demonstrate the estimated effect of the Remit acquisition. You commenced working at ONYA as a graduate accountant a year ago. After the board meeting, Wendy Patton sends for you and asks that you help to prepare detailed responses for the board. Wendy provides you with some data and the most recent Statements of Financial Position for ONYA and for Remit. The following information is also relevant: ONYA is the ultimate parent of a pre-existing group at 1 January 2019. Remit is not a member of a group. ONYA and its subsidiaries have not adopted tax consolidation. There are no intra-group sales or dividends. Both the ONYA Group and Remit have a 31 December financial year end. Remit's recorded net assets are stated at fair value. Assume that the financial statement excerpts provided are reasonable estimates of the acquisition date financial statements of both companies just prior to the acquisition. Initial due diligence undertaken by ONYA indicates that in addition to the recorded assets and liabilities, Remit also controls the following unrecognised identifiable intangible assets: a. Customer relationships with an estimated fair value at 1 January 2019 of $37,200,000. Estimated economic life is 10 years. b. Commercialised software with an estimated fair value at 1 January 2019 of $ 16,000,000. Estimated economic life is 5 years. C. Brand name (Remit) with an estimated fair value at 1 January 2019 of $4,800,000. Estimated economic life is 5 years. The corporate tax rate is 30%. Statements of Financial Position: ONYA Ltd Group Consolidated Statement of Financial Position as at 31 December 2018 Current Assets: ($000) Cash and cash equivalents 142,864 Trade and other receivables 29132 Inventories 432 Total Current Assets 172,428 Non-Current Assets: Receivables 4,796 Equity accounted investments 15,328 Property, plant and equipment (net) 37,552 Intangible assets 2,328,644 Total Non-Current Assets 2,386,320 Total Assets 2,558,748 39,376 976 104,688 26,442 171,482 Current Liabilities: Trade and other payables Borrowings Unearned revenue Provisions Total Current Liabilities Non-Current Liabilities: Borrowings Provisions Total Non-Current Liabilities Total Liabilities Net Assets 1,002,900 25,930 1,028,830 1,200,312 1,358,436 Shareholders' Equity: Issued capital Retained profits General reserve Total Shareholders' Equity 2,016,200 (760,764) 103,000 1,358,436 Remit Pty Ltd Statement of Financial Position as at 31 December 2018 Current Assets: Cash and cash equivalents Accounts Receivable Prepayments Total Current Assets Non-Current Assets: Property, plant and equipment (net) Total Non-Current Assets Total Assets ($000) 8,564 3,400 2,000 13,964 254 254 14,218 Current Liabilities: Accounts payable Tax payable Total Current Liabilities Total Liabilities 4,680 1240 5,920 5,920 Net Assets 8,298 Shareholders' Equity: Issued capital Retained profits General reserve Total Shareholders' Equity 4,000 3,258 1,040 8,298