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Prepare the pre-acquisition entries only at July

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Reference no: EM132852811

Question - On 1 July 2020, Parent Ltd acquired 90% of the issued shares of Subsidiary Ltd on a cum div. basis. The fair value of the consideration paid was $680 000. At this date, the records of Subsidiary Ltd included the following information:

Share Capital $400,000

Retained Earnings $115,000

Dividend payable $50,000

Goodwill $25,000

The dividend liability at 1 July 2020 was paid in September 2020. At 1 July 2020, all the identifiable assets and liabilities of Subsidiary Ltd were recorded at fair value except for the following assets:

Carrying Amount Fair Value

Inventory $80,000 $100,000

Machinery $280,000 $350,000

The NCI at acquisition date is measured based on the proportionate share of the identifiable assets and liabilities in Robin Ltd. The tax rate is 30%. The tax rate is 30%.

Required - Prepare the pre-acquisition entries only at 1 July 2020. Do not prepare BCVR entries.

Reference no: EM132852811

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