n 1 July 2020, Kent Ltd acquired all the share capital (Ex-dividend) of Sub Ltd for $500,000. The financial statements of Kent Ltd showed the equity of Sub Ltd at that date to be: Share capital — 60 000 $5 shares $300 000 General reserve 40 000 Retained earnings 90 000 All the assets and liabilities of Sub Ltd were recorded at amounts equal to their fair values at that date except the following: Carrying Amount Fair value Land $150 000 $170 000 Plant (Cost $400 000) $300 000 $350 000 Inventory $75 000 $80 000
(Consolidation – Wholly Owned Subsidiary)
On 1 July 2020, Kent Ltd acquired all the share capital (Ex-dividend) of Sub Ltd for $500,000. The financial statements of Kent Ltd showed the equity of Sub Ltd at that date to be:
Share capital — 60 000 $5 shares $300 000
General reserve 40 000
All the assets and liabilities of Sub Ltd were recorded at amounts equal to their fair values
at that date except the following:
|
|
Carrying Amount |
Fair value |
|
Land |
$150 000 |
$170 000 |
|
Plant (Cost $400 000) |
$300 000 |
$350 000 |
|
Inventory |
$75 000 |
$80 000 |
Additional information:
- On 10 September 2020, Sub Ltd paid interim cash dividend of $10,000.
- At acquisition date, 1 July 2020, Sub Ltd has an unrecorded Patent that has a fair value of $20,000, and a
Contingent Liability that has a fair value of $15 000. - Plant has expected to have a further 5-year life.
- The tax rate is 30%.
Required:
Prepare the consolidation entries (i.e., BCVR and pre-acquisition elimination entries) at 30 June 2021.
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