Question

On 1 July 2015, High Ltd acquired all the share capital (cum div.) of Five Ltd, giving in exchange 50 000 shares in High Ltd, these having a fair value at acquisition date of $ 6 per share. Costs incurred in undertaking the acquisition amounted to $10 000. The dividend payable at the acquisition date was paid in September 2015. At the time of the acquisition, the statement of financial position of Five Ltd was asfollow

Plant and equipment $218000 share capital (150000 shares) $150000

current assets $100000 Retained earnings $64000

dividend payable $10000

other liabilities $94000

$318000 $318000

the recorded amounts of the identifiable assets and liabilities of Five Ltd at the acquisition date were equal to their fair value except the following:

carrying amount fair value

plant & equipment - land $80000 $85000

current assets - inventory 42000 45000

trademark 0 35000

all inventory as at 1 July 2015 was sold during the year. an amount of $15000 was transferred from retained earnings as at 1 July 2015 to general reserve during the year.

The tax rate is 30%

Required:

A) prepare an acquisitions analysis in relation to High Ltd's acquisitions of Five Ltd

B) Prepare the consolidation worksheet entries (all of them) for the preparation of consolidated financial statements for High Ltd and its subsidiary Five Ltd as at 30 June 2016