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[solution]: onsolidation of wholly owned subsidiary, pre -acquisition equity


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onsolidation of wholly owned subsidiary, pre -acquisition equity and BCVR entries for assets and liabilities.

Lisa Ltd acquired all the issued shares of Kam Ltd on 1 January 2016 for $88,000. At this date the equity of Kam Ltd consisted of

Share Capital                 $100,000

General Reserves         $50,000

Retained Earnings        $10,000

All the identifiable assets and liabilities of Kam Ltd were recorded at amounts equal to their fair values except for:

                                                                                Carrying amount                                     Fair Value

Fixtures & Fittings (cost $70 000)                           $50,000                                                   $60,000

Inventory                                                                    $10,000                                                   $20,000

Of the inventory on hand at 1 January 2016, 90% was sold by 30 June 2016. The remainder was all sold by 30 June 2017. The Fixtures & Fittings was considered to have a further 2 -year life with benefits to be received equally in each of those years. There were no records in the books for a provision of legal claim worth 15,000 and patents of 90,000. These were reflected at fair value.

Required:

Prepare the consolidated worksheet entries for the consolidated financial statements prepared by Lisa Ltd at 30 June 2016. 

Show acquisition analysis calculation, BCVR entries and Pre-acquisition entries for 30.6.16


 


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