For the following case provide all related; a) calculations b) accounting standards c) related journal entries d) relevant explanations.
On 1 July 2019 Ethan Ltd acquired 91% the issued shares of Davis Ltd for $1472000 . The equity of Davis Ltd at this date consisted of:
All the identifiable assets and liabilities of Davis Ltd were recorded at amounts equal to their fair values at acquisition date except for the following;
All inventories on hand at 1 July 2019 are sold by 30 June 2020. Further life of the assets are listed on the above table. Ethan Ltd uses the partial goodwill method.
Tax rate:30%
Required
1- Prepare the acquisition analysis at acquisition date.
2- Prepare the business combination valuation entries and pre-acquisition entry at acquisition date.
3- Prepare the journal entry to recognise NCI at acquisition date.
4-Prepare the consolidation worksheet entries at 30 June 2020. Assume a profit for Davis Ltd for the year ended 30 June 2020 of $29000.
5- Explain how the step 1 to 4 will change if the full goodwill method is used.
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