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Make the pre-acquisition entries as at July

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Question - Morrison Ltd. acquired all the issued shares (cum. dividend) of Andrews Ltd. on 1 July 2020 for $150 000. At this date the equity of Andrews Ltd. was as follows:

Share Capital $54,000

Retained Earnings $36,000

General reserve $18,000

As at 1 July 2020, Andrews Ltd. had a dividend payable liability of $30 000. All the identifiable assets and liabilities of Andrews Ltd. were recorded at amounts equal to their fair values at acquisition date except for:

 

Carrying Amount

Fair Value

Inventory

$14,000

$16,000

Machinery (cost $100 000)

$92,500

$94,000

The tax rate is 30%.

Required - Make the pre-acquisition entries as at 1 July 2020?

Reference no: EM133015510

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