Reference no: EM133065472

Question - On 1 July 2019, Pelt Ltd acquired 80% of the issued shares of Dilard Ltd for $3,250,000 cash and the transfer of a patent which had a fair value of $900,000.

The separate accounting records of Dilard Ltd at 1 July 2019 include the following balances: Contributed equity of $3,500,000 and Retained earnings of $1,400,000. At the date of acquisition, all assets of Dilard Ltd were recorded at fair value except for land which had a carrying amount of $264,000. The land had a fair value of $784,000. A contingent liability relating to an unsettled legal claim with a fair value of $250,000 was recorded in the notes of Dilard Ltd's financial statements. The tax rate is 30%.

Required -

1. Prepare the acquisition analysis as at acquisition date.

2. State the amount that would be disclosed in the consolidated financial statements at 30 June 2021 for Investment in Dilard Ltd and explain why.

3. Based on the information provided, show the journal entries, including all related tax effects, required upon consolidation as at 30 June 2021. The legal claim has not been settled and the land has not been sold. There are no inter-entity transactions. Note: NCI allocation journals are not required.

4. Using consolidated journals from part (3) complete the partial consolidated worksheet for the year ending 30 June 2021.