Reference no: EM132575991

Question - On 1 July 2019, John Ltd acquired all the issued shares of Wayne Ltd for $250,000. At this date, the financial statements of Wayne Ltd showed the following: $ Share capital 170,000 Retained earnings 30,500 General Reserve 4,800 Total equity 205,300 At acquisition date, all the net identifiable assets and liabilities in Wayne Ltd were recorded at amounts equal to their fair value except for: Asset Carrying amount ($) Fair Value ($) Inventories 5,000 8,000 Plant (cost $400,000) 200,000 210,000 The records also showed that the company had recorded existing goodwill of $5,000. The Plant was calculated to have a further life of 5 years, and was depreciated on a straight-line basis. All inventory was sold by 30 June 2020. Assume 30% tax rate.

Required -

(a) Prepare the acquisition analysis at 1 July 2019.

(b) Prepare the consolidation entries at acquisition date, 1 July 2019. Include narrations for each entry.

(c) Prepare the consolidation worksheet as at 1 July 2019.

(d) Prepare Balance sheet for the reporting Group, James Ltd as at 1 July 2019 in narrative format.