Reference no: EM132563442

Super Ltd acquired all the issued shares of Market Ltd on 1 July 2018 for $550 000. At this date, the equity of Market Ltd consisted of the following:

Share Capital $280 000

Retained Earnings $130 000

General Reserve $ 80 000

                     $490 000

At the acquisition date, all the identifiable assets and liabilities of Market Ltd were recorded at amounts equal to the fair value except the following:

                                           Carrying amount                    Fair value

Plant (cost $200 000)          $80 000                               $110 000

Inventories                          $40 000                           $60 000

Land                                    $80 000                         $90 000

1. The plant was considered to have a further 5-year life and was still on hand at 30 June 2020. The inventories and land were all sold by 30 June 2019. Also not recorded by Market Ltd was a contingent liability relating to a current court case in which Market Ltd was involved with a supplier that was seeking compensation. Super Ltd placed a fair value of $15 000 on this liability. This court case was settled in September 2019 at which time Market Ltd was required to pay damages of $17 000.
2. In February 2020, Market Ltd transferred $15 000 from the general reserve on hand at 1 July 2018 to retained earnings.
3. The tax rate is 30%.

Question 1: Prepare the "Pre-Acquisition Elimination entries" ONLY at 30 June 2020 for the consolidated financial statements of Super Ltd Group.