Reference no: EM13502194

Question 1: Consolidations

On 1 July 2011 Martin Ltd acquired all of the shares of Lewis Ltd for $4,946,505
At the 1 July 2011 the statement of financial position of Lewis Ltd was as follows:

Lewis Ltd
Statement of Financial Position
as at 1 July 2011

Current Assets					Current Liabilities
Cash at Bank			43,200		Accounts Payable			126,000
Accounts Receivable (net)			89,280
Inventory			187,200	319,680
Non-Current Assets					Equity
Land			1,920,000		Share Capital		2,740,608
Motor Vehicles			273,000		Reserves		685,152
Plant and Equipment			2,160,000		Retained Earnings		1,141,920	4,567,680
Goodwill			21,000	4,374,000
				4,693,680				4,693,680

The following information about the value of assets was provided:

		Cost	Accum depreciation	Fair value
	Inventory	$187,200		$234,000
	Motor Vehicles	$327,600	$54,600	$313,950
	Plant and Equipment	$2,808,000	$648,000	$2,592,000

The Motor Vehicle is expected to have a further 4 years useful life and the Plant and Equipment is expected to have a further 5 years useful life. All inventory on hand at 1 July 2011 was sold by 30 June 2012. At 1 July 2011 Lewis Ltd had a contingent liability of $70,000 The contingent liability was settled in February 2012 for $67,900 The tax rate is 30%.

Required:
a. Do the necessary acquisition analysis and provide the business combination valuation entries and the pre-acquisition adjustment entry at acquisition date.

b. Provide the business combination valuation entries and the pre-acquisition adjustment entry at 30 June 2013.