On 1 July 2019, Silver Ltd, a reporting entity, acquired all of the issued shares of Brumby Ltd. As part of the settlement, Silver Ltd agreed to pay $1,700,000 on 1 July 2019 and $1,284,000 payable on 1 July 2020. The appropriate discount rate was7% per annum. Silver Ltd also issued 475,000 shares of Silver Ltd to the shareholders of Brumby Ltd. At acquisition date, the fair value of the ordinary shares of Silver Ltd were $2.50 and the fair value of the ordinary shares of Brumby Ltd were $3.00.Brumby Ltd's shareholders' equity on 1 July 2019 consisted of the following:Issued capital$1,900,000Retained earnings$650,000Total shareholders' equity$ 2,550,000At 1 July 2019, all of Brumby Ltd's net assets were recorded at fair value, except the following items:Carrying AmountFair ValueMachinery$1,120,000$1,400,000Brumby Ltd purchased the plant for $1,500,000. On 1 July 2019, the plant had an estimated remaining useful life of 7 years with zero residual value. Brumby Ltd is depreciating the asset straight-line over its useful life.The directors of Silver Ltd believe that the goodwill relating to the acquisition of Brumby Ltd was impaired by $140,000 during the year ended 30 June 2020.Both Silver Ltd and Brumby Ltd use the cost model for the valuation of assets, so any fair value adjustments will be completed as consolidation adjustments.The company income tax rate is 30%In preparing the acquisition analysis, what is the amount for the fair value of identifiable net assets of Brumby Ltd?

Given: A consolidated financial statement will record the net identifiable assets of the subsidiary…

corded at fair value, except the following items: Fair Value $1,400,000 p. On 1 July 2019, the plant had an estimated remaining useful life of 7 years with zero residual value. Brumby Ltc dwill relating to the acquisition of Brumby Ltd was impaired by $140,000 during the year ended 30 June 2020. odel for the valuation of assets, so any fair value adjustments will be completed as consolidation adjustments. at je the amount for the fair value of identifiable net assots of Brumhy I td2

corded at fair value, except the following items: Fair Value $1,400,000 p. On 1 July 2019, the plant had an estimated remaining useful life of 7 years with zero residual value. Brumby Ltc dwill relating to the acquisition of Brumby Ltd was impaired by $140,000 during the year ended 30 June 2020. odel for the valuation of assets, so any fair value adjustments will be completed as consolidation adjustments. at je the amount for the fair value of identifiable net assots of Brumhy I td2

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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