Prepare acquisition analysis and Consolidation worksheet entries Syd Ltd acquired all the issued shares (Cum-div.) of Mel Ltd on 1 July 2020. At this date the financial position of Matt Ltd was as follows: Carrying Amount Fair Value Plant $300 000 270 000 Accumulated Depreciation (60 000) Account Receivables 25 200 25 200 Cash 15 000 15 000 Inventories 15 600 19 600 295 800 Share Capital 220 000 General Reserve 23 400 Retained Earnings 24 200 Provisions of Employee benefits 19 200 19 200 Dividend Payable 9 000 9 000 295 800 Additional information: The assets of Mel Ltd did not include a patent that was valued by Syd Ltd at $12 000. Its useful life was considered to be 6 years, with benefits being received equally over that period. The plant was considered to have a further 10-year life and is depreciated on a straight-line basis. All the pre-acquisition inventories were not sold by 30 June 2021. An interim dividend of $10,000 paid by Mel Ltd in September 2020. Syd Ltd declared a final dividend of $20 000 in June 2020. In exchange for the shares in Mel Ltd, Syd Ltd gave the following consideration: • 80 000 shares in Robert Ltd, each share having a fair value of $2.50 per share • cash of $45 000 • Artwork having a fair value of $35 000. Syd Ltd incurred legal and accounting costs of $4 500 and share issue costs of $3 000. The tax rate is 30%. Required: a. Prepare Acquisition Analysis at 1 July 2020. b. Prepare the consolidation worksheet entries for consolidated financial statements prepared by Syd Ltd at 30 June 2021. c. Prepare the acquisition analysis at 1 July 2020 assuming Syd Ltd acquired the issued share of Mel Ltd on Ex-div basis.
Question 3: Prepare acquisition analysis and Consolidation worksheet entries
Syd Ltd acquired all the issued shares (Cum-div.) of Mel Ltd on 1 July 2020. At this date the financial position of Matt Ltd was as follows:
Carrying Amount Fair Value
Plant $300 000 270 000
Accumulated
Cash 15 000 15 000
Inventories 15 600 19 600
295 800
Share Capital 220 000
General Reserve 23 400
Provisions of Employee benefits 19 200 19 200
Dividend Payable 9 000 9 000
295 800
Additional information:
The assets of Mel Ltd did not include a patent that was valued by Syd Ltd at $12 000. Its useful life was considered to be 6 years, with benefits being received equally over that period.
The plant was considered to have a further 10-year life and is depreciated on a straight-line basis.
All the pre-acquisition inventories were not sold by 30 June 2021.
An interim dividend of $10,000 paid by Mel Ltd in September 2020.
Syd Ltd declared a final dividend of $20 000 in June 2020.
In exchange for the shares in Mel Ltd, Syd Ltd gave the following consideration:
• 80 000 shares in Robert Ltd, each share having a fair value of $2.50 per share
• cash of $45 000
• Artwork having a fair value of $35 000.
Syd Ltd incurred legal and accounting costs of $4 500 and share issue costs of $3 000.
The tax rate is 30%.
Required:
a. Prepare Acquisition Analysis at 1 July 2020.
b. Prepare the consolidation worksheet entries for consolidated financial statements prepared by Syd Ltd at 30 June 2021.
c. Prepare the acquisition analysis at 1 July 2020 assuming Syd Ltd acquired the issued share of Mel Ltd on Ex-div basis.
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