Reference no: EM131822074
Assignment
Business combination valuation entries, pre-acquisition entries subsequent to acquisition
Robert Ltd acquired all the issued shares (cum div.) of Matt Ltd on 1 July 2015. At this date the financial position of Matt Ltd was as follows:
|
Plant
|
$200 000
|
176 400 $
|
|
Accumulated depreciation
|
(25 600)
|
|
|
Goodwill
|
4 800
|
|
|
Receivables
|
15 200
|
15 200
|
|
Cash
|
5 000
|
5 000
|
|
Inventory
|
15 000
|
19 000
|
|
|
214 400
|
|
|
Share capital: 120 000 shares
|
120 000
|
|
|
General reserve
|
23 200
|
|
|
Retained earnings
|
44 000
|
|
|
Provisions
|
19 200
|
19 200
|
|
Dividend payable
|
8 000
|
8 000
|
|
|
214 400
|
|
The assets of Matt Ltd did not include a patent that was valued by Robert Ltd at $10 000. Its useful life was considered to be 5 years, with benefits being received equally over that period. The plant was considered to have a further 10-year life and is depreciated on a straight-line basis. All the inventory was sold by 30 June 2016. The goodwill on hand at 1 July 2015 was written off as the result of an impairment test conducted in June 2017. The dividend on hand at 1 July 2015 was paid in August 2015.
In exchange for the shares in Matt Ltd, Robert Ltd gave the following consideration:
• 50 000 shares in Robert Ltd, each share having a fair value of $2.00 per share.
• Cash of $40 000.
• Artworks having a fair value of $60 000.
Robert Ltd incurred legal and accounting costs of $5000 and share issue costs of $4000.
In January 2019, Matt Ltd paid a bonus dividend of $40 000, being one share for every three shares held, the dividend being paid from retained earnings on hand at 1 July 2015.
The tax rate is 30%.
Required
Prepare the consolidation worksheet entries for consolidated financial statements prepared by Robert Ltd at 30 June 2020.