Reference no: EM133121828
Question - On 30 June 2022, Hub Ltd. paid $120,000 to buy all the shares of Olive Ltd. On this date, Olive Ltd. reported the following balances.
Share capital $77,000
Retained earnings $5,000
General Reserve $20,000
On the date of acquisition, all the assets and liabilities of Olive Ltd. were at fair value, except:
Land was recorded at a cost of $250,000, but had a fair value of $180,000
Olive Ltd. had recorded $90,000 as an expense for in-process research and development. However, Hub Ltd. considered that this research and development was now an asset with a fair value of $18,000. Olive Ltd. considered that the fair value should be $25,000.
Required -
1. Prepare the acquisition analysis on 30 June 2022.
2. Prepare all the relevant journal entries required for the consolidation worksheet on 30 June 2022.
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