Reference no: EM132613695

Sam ltd purchased 97% of the issued shares ( Ex div) of rex Ltd for $1919000 on 1 july 2019 when the equity of Rex Ltd was as follows:

Share capital                       7676000

General Reserve                  5757000

Asset Revaluation surplus  287850

At this date Rex Ltd has not recorded any goodwill and all identifiable assets and liabilities were recorded at fair value except for the following:

Account                      cost carrying amt              fair value further

inventories                   57600                        63400

land                            144000                       158000

vehicle                         222500                    178000

                                     214000                    5

Contingent liability

Rex Ltd identified at acquisition date a lawsuit where Rex Ltd was sued by a former supplier with fairvalue of : 23000

Unrecorded asset

Rex ltd had unrecorded and internally generated patent with fair value of : 58000

Unrecorded Asset

Rex Ltd had unrecorded and internally generated generated in process research and development with the fair value of : 44000

70% of inventory were sold by 30 June 2020. Further life of the assets are listed on the above table. Partial goodwill method method is under use and Tax rate : 30%

required:

Question 1) Prepare the acquisition analysis at acqusition date.

Question 2) Prepare the business combination valuation entries and pre- acquisition entry at acquisition date.

Question 3) Prepare the journal entry to recognize NCI at acquisition date.

Question 4) Prepare the consolidation worksheet entries entries at 30 june 2020. Assume a profit for Rex Ltd for the year ended 30 june 2020 of $3470900.

Question 5) Analyse how step 1 to 4 will change if the full goodwill method is used.

Question 6) Compare in detail the current situation with the case that Sam Ltd acquires only 20% of issued shares of Rex Ltd with a significant influence of Rex Ltd.