Reference no: EM13959126
Consolidation of wholly owned subsidiary, pre-acquisition equity and BCVR entries for assets and liabilities
Tamara Ltd acquired all the issued shares of Rex Ltd on 1 January 2016 for $88 000. At this date the equity of Rex Ltd consisted of:
Share capital $ 40 000
General reserve 10 000
Retained earnings 8 000
All the identifiable assets and liabilities of Rex Ltd were recorded at amounts equal to their fair values except for:
Carrying amount Fair value
Fixtures & Fittings (cost $70 000) $50 000 $55 000
Inventory 10 000 16 000
Of the inventory on hand at 1 January 2016, 90% was sold by 30 June 2016. The remainder was all sold by 30 June 2017. The Fixtures & Fittings was considered to have a further 2-year life with benefits to be received equally in each of those years. There were no records in the books for a provision of legal claim worth 5,000 and patents of 60,000. These were reflected at fair value.
The tax rate is 30%.
Required:
Prepare the consolidated worksheet entries for the consolidated financial statements prepared by Tamara Ltd at 30 June 2016.
Show acquisition analysis calculation, BCVR entries and Pre-acquisition entries for 30.6.16
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