** Question : 4. Prepare the consolidation worksheet entries at 30 June 2019. Assume a profit for Chris Ltd for the year ended 30 June 2019 of $61,400 (please use below information)
Steps (please refer to this steps in order to answer the question below): 1. Prepare the acquisition analysis at acquisition date.(please refer to below) 2. Prepare the business combination valuation entries and pre-acquisition entry at acquisition date.(please refer to below) 3. Prepare the journal entry to recognize NCI at acquisition date.(please refer to below)
Laura Ltd purchased 97% of the issued shares of Chris Ltd for $1,759,000 on 1 July 2018 when the equity of Chris Ltd was as follows;
Share capital
$703,600
Asset Revaluation surplus
$527,700
Retained earnings
$263,850
At this date, Chris Ltd had not recorded any goodwill, and all identifiable assets and liabilities were recorded at fair value except for the followings;
Account
Cost
Carrying Amount
Fair value
Further Life (Years)
Inventories
$52,800
$58,100
Land
$132,000
$145,000
Equipment
$205,000
$164,000
$197,000
8
Chris Ltd identified at acquisition date a contingent liability related to a lawsuit where Chris Ltd was sued by a former supplier
$21,000
Chris Ltd had unrecorded and internally generated Patent with the fair value of :
$53,000
Chris Ltd had unrecorded and internally generated in-process research and development with the fair value of :
$40,000
60% of inventory on hand at 1 July 2018 were sold by 20 June 2019. Further life of the assets is listed on the above table. Partial goodwill method is under use and the tax rate is 30%
2. Business Combination Valuation at acquisition date:
