QUESTIONS 4: CONSOLIDATION WORKSHEET ENTRIES (25 MARKS)

On 1 July 2019, ABC Ltd acquired all the issued shares of XYZ Ltd for $268,000. At this date, the equity of XYZ Ltd consisted of:

Share capital	$ 150,000
General reserve	30,000
Retained earnings	50,000

All the identifiable assets and liabilities of XYZ Ltd were recorded at amounts equal to their fair values except for:

	Carrying amount	Fair value
Plant (cost 300,000)	250,000	280,000
Inventory	30,000	40,000

Plant can be used for another 5 years since the acquisition date. Inventory are sold by 30/6/2020. The tax rate is 30%.

Required:

PART A: Prepare an acquisition analysis at 1 July 2019 by ABC Ltd.

PART B: Prepare consolidation worksheet entries on 30 June 2020.