Reference no: EM132951657

On 1 July 2021, Xero Ltd acquired 90% of the issued shares of Accounting Ltd for $750,000 when the equity of Accounting Ltd consisted of:

Share Capital                   $400,000
Retained Earnings             $150,000
Asset Revaluation reserve     $50,000

At the acquisition date all the identifiable assets and liabilities of Accounting Ltd were recorded at fair value except for the following assets:

                                              Carrying Amount            Fair Value
Equipment (Cost $100,000)                 $160,000              $200,000
Land                                                 $560,000              $700,000

• The NCI at acquisition date is measured based on the proportionate share of the identifiable assets and liabilities in Accounting Ltd. The tax rate is 30%.

Required

Problem 1: Prepare Acquisition analysis as at 1 July 2021