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Provide the consolidated statement of financial position

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Reference no: EM132582187

Hitech Ltd acquired all of the issued share capital of Lotech Ltd on 30 June 2016 for a cash consideration of $400,000

At that time the net assets of Lotech Ltd were represented as follows:

Share capital                   300,000

Retained earnings              50,000

Net assets                       350,000

When Hitech acquired its investment in Lotech the following information applied:

Land held by Lotech had a fair value $10,000 greater than the carrying value
A contingent liability relating to an unsettled legal claim with a fair value of $3,000 was recorded in the notes to Lotech's financial statements
The tax rate is 30%

Required:

Question (a) Analyse the situation and provide consolidation journal entries (narrations are required)

Question (b) Provide the consolidated statement of financial position for the above entities as at 30 June 2017.

Reference no: EM132582187

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