171819202122232425262728293031323334353637Griffin Ltd acquired all the issued shares (cum div.) in Python Ltd on 1 July 2020, paying 5905 000 cash.Costs incurred in undertaking the acquisition amounted to $7 000, these did not relate to issuing the new shares.On 30 June 2020, the financial statement of Python Ltd showed the following balances:Share capital (12,000 shares @50 each)Retained earningsDividend payableGoodwill$600,000$270,000$36,000$17.500All the identifiable assets and liabilities of Python Ltd at the acquisition date were recorded at amounts equal to their fair values except for:Fair valueInventoryPlant (Cost $1,250,000)Carrying amount$60,000$875,000$52,000$887,000The assets recognised by Python Ltd did not include an internally generated patent of Python Ltd that was valued by Griffin Ltd at $28,000.its useful life was considered to be 4 years, with benefits being received equally over that period.80% of the inventory on hand at the acquisition date was sold by 30 June 2021. The plant is expected to have a further useful life of 5 years. The tax rate is 30%Required:Show the acquisition analysis as at 1 July 2020 and prepare the pre-acquisition consolidation worksheet at 30 June 2021,using the worksheet provided below for the preparation of the consolidated financial statements of Griffin Ltd.Assume that goodwill is accounted for as a Business Combination Valuation Reserve (BCVR) entry.

The consideration transferred by Griffin Ltd is the cash paid $905,000 plus the costs incurred in…

Required: Show the acquisition analysis as at 1 July 2020 and prepare the pre-acquisition consolidation worksheet at 30 June 2021, using the worksheet provided below for the preparation of the consolidated financial statements of Griffin Ltd. Assume that goodwill is accounted for as a Business Combination Valuation Reserve (BCVR) entry.

Required: Show the acquisition analysis as at 1 July 2020 and prepare the pre-acquisition consolidation worksheet at 30 June 2021, using the worksheet provided below for the preparation of the consolidated financial statements of Griffin Ltd. Assume that goodwill is accounted for as a Business Combination Valuation Reserve (BCVR) entry.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 25E

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