Reference no: EM132554193

On 1 January 2020, Aqua Ltd purchased all the shares of Marine Ltd for $2,000,000. The following extract provides information about Marine Ltd's financial position on that date.

$ $

Share Capital 1,500,000

Buildings 800,000

Retained Earnings 300,000

Accumulated Depreciation (500,000)

Reserves 200,000

Additional Information

1. The fair value of the buildings is $400,000. They have a remaining useful life of 25 years.
2. On 30 September 2020, Aqua sold a vehicle to Marine Ltd for $20,000. The vehicle was originally acquired for $40,000 and had been depreciated by $15,000. It has remaining useful life of 3 years.

Question i Calculate the goodwill on acquisition, clearly indicating whether it is positive or negative.

Question ii Prepare the pre-acquisition elimination entries on 31 December 2021

Question iii Prepare a other elimination entries required on 31 December 2020