Reference no: EM132563434

Parent Ltd purchased all of the shares of Sub Ltd on 1 July 2016 for $630 000. At that date the financial statements of Sub Ltd revealed the following information:

Share capital                   $300 000

Retained earnings             $230 000

                                   $530 000

At acquisition date, all the identifiable assets and liabilities of Sub Ltd were carried at fair value except for the following:

                                                 Carrying Amount            Fair value

Equipment (cost $ 200 000)$140 000                  $160 000

Inventories                          $30 000                     $40 000

1. At acquisition date, the equipment had a remaining useful life of 4 years with a residual value of $0. Sub Ltd depreciates the equipment using the straight-line method.
2. All the inventories were sold externally during the year ended 30 June 2019.
3. The tax rate is 30%.
4. The financial year of the group ends on 30 June.

Required:

Question a) Perform an acquisition analysis to determine whether there is any goodwill or gain on bargain purchase. Show all calculations.