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Question - On 1 July 2018, Xero Ltd acquired all the share capital of MYOB Ltd for $725,000 cum div. At this date, MYOB Ltd.'s equity and dividend payable were:
Share capital - 200,000 shares $375,000
General reserve 105,000
Retained earnings 95,000
Dividend Payable 25,000
All identifiable assets and liabilities of MYOB Ltd were recorded at fair value as at 1 July 2018 except for the following:
Carrying amount
Fair value
Inventory
$98,000
$108,000
Land
165,000
195,000
Equipment (cost $130,000)
90,000
100,000
The equipment is expected to have a further 10-year life. All the inventory taken over on 1 July 2018 was sold by 30 June 2019. The tax rate is 30%. On 30 June 2019, the directors of MYOB Ltd decided to transfer $ 52 500 from the general reserve to retained earnings.
REQUIRED -
A. Prepare the acquisition analysis in relation to Xero Ltd acquisition of MYOB Ltd.
B. Prepare the consolidated worksheet entries for the consolidated financial statements prepared by Xero Ltd at 30 June 2019. The dividend payable at 1 July 2018 was paid by MYOB Ltd on 1 January 2019 and treated.
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