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Record the business combination and valuation reserve

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Question - Aman limited acquired all the issued shares of Bent Ltd on 1st July 2019 for $2,180,125. At this date, the equity of the Bent Ltd stated below.

Share capital $765,112

Retained earnings $325,524

General reserve $260,421

All the identifiable assets and liabilities of Bent Ltd were recorded at amounts equals to their fair values at acquisition date except for the following.

Account Cost Carrying amount Fair value Further useful life

Inventories $327,591 $589,156

Land $655,183 $1,179,583

Plant $915,478 $763,110 $1,373,852

The applicable Tax rate is 30%

A. Prepare the acquisition analysis at 1st July 2019.

B. Record the business combination and valuation reserve (BCVR) adjusting entry assuming 96% of the inventories were sold by 30th June 2020.

Reference no: EM133037531

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