Parent Ltd paid $237,000 for 90% of the shares of Subsidiary Ltd on 1 July 2020. All identifiable assets and liabilities of the subsidiary Ltd were recorded at fair value at acquisition date. At acquision date, the equity of Subsidiary
Parent Ltd paid $237,000 for 90% of the shares of Subsidiary Ltd on 1 July 2020. All identifiable assets and liabilities of the subsidiary Ltd were recorded at fair value at acquisition date.
At acquision date, the equity of Subsidiary Ltd consisted of the following.
Share capital $125,000
The Non-controlling interest in Subsidiary Ltd was considered to have a fair value of $25,000 and Parent Ltd uses the full
During the 2020/21 year Tortoise Ltd recorded a profit of $34,000.
Assume an income tax rate of 30%.
Required
Prepare the acquisition analysis at 1 July 2020 clearly showing fair value of goodwill in subsidiary and premium paid by the Parent Ltd.
Prepare the
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