Question in the file

Robert 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:

Robert 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: 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. Solution: At 1 July 2015: Net fair value of identifiable assets and liabilities of Matt Ltd Consideration transferred Gain on bargain purchase Goodwill adjustment 1. Business combination valuation entries at 30 June 2020 2. Pre-acquisition entries At 1 July 2015: At 30 June 2020