Sydney Ltd acquires all the issued capital of Canberra Ltd on 1 July 2020. On this date the following balances are recorded in the financial statements:

Share capital $450,000

General reserve $120,000

Retained earnings $240,000

On 1 July 2020, all the identifiable assets and liabilities of Canberra Ltd show the fair value.

Canberra Ltd declares $15,000 of dividends from the post-acquisition profits. The financial statements of Sydney Ltd and Canberra Ltd as at 30 June 2021 are as follows:

Sydney Ltd	Canberra Ltd
Retained earnings (1 July 2020)	$270,000	$240,000
Profit for the period	105,000	75,000
Less divided proposed	(60,000)	(15,000)
Retained earnings (30 June 2021)	315,000	300,000
Share capital	2,100,000	450,000
General reserve	276,000	120,000
Total Equity	2,691,000	870,000
Provisions	90,000	60,000
Payables	45,000	75,000
Dividend payable	60,000	15,000
Long-term debt	150,000	330,000
Total liabilities	345,000	480,000
Total equities and liabilities	3,036,000	1,350,000
Property, plant and equipment	1,800,000	2,460,000
Accumulated depreciation – Property, plant and equipment	(885,000)	(1,950,000)
Vehicles	900,000	360,000
Accumulated depreciation - vehicles	(540,000)	(240,000)
Land	600,000	420,000
Brands	150,000	105,000
Investment in Canberra Ltd	816,000	-
Goodwill	-	-
Cash at bank	15,000	36,000
A/Receivables	30,000	39,000
Dividend receivable	15,000	-
Inventories	135,000	120,000
Total assets	3,036,000	1,350,000

Required:

1. Calculate goodwill on 1 July 2020 in accordance with AASB 3 Business Combinations. 
2. Prepare the consolidation journal entries for Sydney Ltd’s group as at 30 June 2021.

3. Prepare consolidation worksheet for Sydney Ltd and its control entity using excel spread sheet
4. Prepare consolidated financial statements using excel spread sheets for Sydney Ltd’s group as at 30 June 2021. 

   Part B 

   On 1 July 2021, Patricia Ltd acquired all the issued capital of Noreen Ltd in exchange 500,000 shares where the fair value of each share was $6.00. The financial manager of Patricia Ltd reported all the financial information regarding acquisition of Noreen Ltd to the board of directors. The financial manager of Patricia Ltd calculated goodwill of $200,000 and showed it to board of directors. However, two directors were confused whether this goodwill should be appeared in the statement of financial position or not.

   Required:

   Write a statement for the financial manager of Patricia Ltd regarding goodwill and its impact on financial statements in the current and future years consistent with AASB 3 – Business Combinations.