Savannah Inc. is a rapidly growing company known for its smart business decisions and ongoing expansion. They have become dynamic and forward-thinking over time, looking for opportunities to grow and diversify. Their journey began with a significant step: acquiring Amelia Inc., their first subsidiary. This paved the way for more acquisitions and growth. However, here is the challenge: Savannah's accounting team does not have any experience in preparing for consolidated financial statements. In light of this, Savannah's CEO, John Smith, is seeking your professional assistance. He knows that preparing consolidated financial statements, which means combining financial statements from Savannah Inc. and Amelia Inc., is a complex task. Your expertise and knowledge will play a crucial role in ensuring the successful consolidation of the financial statements of these two companies. To make this happen, Mr. Smith has asked the accounting team to share all relevant information with you for your review and guidance. The information for Savannah Inc. and Amelia Inc. on the acquisition date can be seen as follows. On the 1 st of July 2022, Savannah Inc. underwent an acquisition process in which they acquired all the issued shares of Amelia Inc. The total consideration for this acquisition included $30,000 in cash and 20,000 shares in Savannah Ltd, valued at \$3 per share on the acquisition date. At the time of this acquisition, the equity structure of Amelia Inc. was as follows: - Share Capital: Amelia Inc. had a total share capital of $66,000. - Retained Earnings: Amelia Inc. had retained earnings amounting to $6,000. As of 1 July 2022, all the identifiable assets and liabilities of Amelia Inc. were recorded at amounts equal to their fair values, with a few exceptions: Required: Part A: Explain to the CEO of Savannah how you are going to consolidate the financial statements of Savannah Inc. and Amelia Inc.. Part B: Perform an acquisition analysis on the acquisition date and explain to the CEO of Savannah the purpose of this analysis. Part C: Prepare consolidation worksheet entries on the acquisition date and explain to the CEO of Savannah the reasoning behind preparing these journal entries. Your professionalism has impressed Savannah's CEO, John Smith, and he would like to invite you to be a long-term accounting consultant for consolidation. This means you will be responsible for assisting with the consolidation of the financial statements of Savannah Inc. and Amelia Inc. for each fiscal year. The CEO has instructed the accounting team to provide you with relevant information in the first year following the acquisition. The information is summarised below. - The plant identified on the acquisition date (1 July 2022) was expected to have a 5 -year lifespan starting from that date. On August 18,2022, the patents identified at the time of acquisition were sold for $120,000 to an external entity, ABC Corporation. The patents had indefinite useful life and had not been amortised. All inventories identified during the acquisition process were subsequently sold to another company, XYZ Enterprise, by 30 June 2023. - On 1 January 2023, Savannah Inc. sold inventories to Amelia Inc. for \$1,200. The cost of these inventories was $600. However, as of 30 June 2023, Amelia Inc. had not yet sold these inventories and continued to hold them in their inventory. - On June 1, 2023, Amelia Inc. purchased a plant from an external company, Darwin Inc., for a cost of $14,000. On the same date, Amelia Inc. sold this plant to Savannah Inc. for $15,200. The plant is subject to depreciation at an annual rate of 10%. Required: Part D: Prepare consolidation worksheet entries as at 30 June 2023. Part E: Explain to the CEO of Savannah why the consolidation worksheet entries prepared for 30 June 2023 are different from those prepared for the acquisition date. In the second year following the acquisition, the accounting team of Savannah Inc. shared with you relevant information for your review. The information is summarised below. - As of 1 July 2023, Amelia Inc. still held inventories sold to it by Savannah Inc. in the previous year. However, none of these inventories were on hand at 30 June 2024. - At 30 June 2024, Savannah Inc. still held the plant that was sold to it by Amelia Inc. in the previous year. - Savannah Inc. charged consultation services to Amelia Inc., totaling $20,000. As of the end of June 30, 2024, half of this amount, $10,000, remained unpaid by Amelia Inc. Required: Part F: Prepare consolidation worksheet entries as at 30 June 2024. Part G: Explain to the CEO of Savannah why the consolidation worksheet entries prepared for 30 June 2024 are different from those prepared for 30 June 2023