Reference no: EM132698037
Max Ltd acquired all the issued shares (cum div.) of Bluto Ltd on 1 January 2019 for $273 000 and will be required to prepare consolidated financial statements at the end of the next financial year.
The accountant for Popeye Ltd, Ms Olive Oyl, has been informed that she will need to consider applying AASB 3 Business Combinations in preparing these statements. Unfortunately, this has caused Olive some confusion as she is not aware of any links between AASB 3 and AASB 10. She has asked for your advice.
At the date of acquisition the equity of Bluto Ltd was recorded at:
Share capital $150 000
Reserves 40 000
Retained earnings 60 000
On 1 January 2019, the records of Bluto Ltd also showed that the company had a dividend payable liability of $10 000, the dividend to be paid in March 2019. All other assets and liabilities were carried at amounts equal to their fair values.
Required
Question 1. Discuss why AASB 3 may be related to the application of AASB 10.
Question 2. Prepare the consolidation worksheet entries on 1 January 2019, immediately after combination.
Question 3. Prepare the consolidation worksheet entries at 30 June 2019.
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