Determine the amount of goodwill or gain on bargain purchase

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Reference no: EM132613830

On 1 July 2016, Gold Ltd acquired all the issued capital of Silver Ltd for a cash payment of $550 000 when the equity of Silver Ltd was:

Share capital $480 000

Retained earnings $ 50 000

At 1 July 2016, all assets of Silver Ltd were fairly valued, with the exception of an item of plant, with a carrying amount of $330 000, but a fair value of $390 000. The plant was initially acquired by Silver Ltd on 1 July 2012 for $550 000 when it had an estimated useful life of 10 years, with no residual value.

Tax rate is 30%. Gold Ltd also has small shareholdings in other companies.

Question 1- Prepare an acquisition analysis and determine the amount of goodwill or gain on bargain purchase at acquisition.

Question 2- Prepare the acquisition elimination journal entries for consolidation as at 30 June 2019

Reference no: EM132613830

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