Syd Ltd acquired all the issued shares (Cum-div.) of Mel Ltd on 1 July 2021. At this date the financial position of Matt Ltd was as follows: Carrying Amount Fair Value Plant $300 000 280 000 Accumulated Depreciation (60 000) Account Receivables 25 200 25 200 Cash 15 000 15 000 Inventories 15 600 20 600 295 800 Share Capital 220 000 General Reserve 23 400 Retained Earnings 24 200 Provisions of Employee benefits 19 200 19 200 Dividend Payable 9 000 9 000 295 800
Syd Ltd acquired all the issued shares (Cum-div.) of Mel Ltd on 1 July 2021. At this date the financial position of Matt Ltd was as follows:
|
|
Carrying Amount |
Fair Value |
|
Plant |
$300 000 |
280 000 |
|
|
(60 000) |
|
|
|
25 200 |
25 200 |
|
Cash |
15 000 |
15 000 |
|
Inventories |
15 600 |
20 600 |
|
|
295 800 |
|
|
|
|
|
|
Share Capital |
220 000 |
|
|
General Reserve |
23 400 |
|
|
|
24 200 |
|
|
Provisions of Employee benefits |
19 200 |
19 200 |
|
Dividend Payable |
9 000 |
9 000 |
|
|
295 800 |
|
|
|
|
|
Additional information:
The assets of Mel Ltd did not include a patent that was valued by Robert Ltd at $12 000. Its useful life was considered to be5 years, with benefits being received equally over that period.
The plant was considered to have a further 10-year life and is
All the pre-acquisition inventories were not sold by 30 June 2019.
An interim dividend of $10,000 paid by Mel Ltd in September 2020.
Syd Ltd declared a final dividend of $20 000 in June 2020.
In exchange for the shares in Mel Ltd, Syd Ltd gave the following consideration:
Robert Ltd incurred legal and accounting costs of $4 500 and share issue costs of $3 000.
The tax rate is 30%.
Required:
At 1 July 2021:Use the following table.
|
FVINAL= (fair value of net identifiable assets and liabilities) |
$ |
|
Equity of Matt Ltd |
|
|
|
|
|
Plant |
|
|
Inventory |
|
|
Patents |
|
|
FVINAL |
XXX |
|
Consideration Transferred: |
|
|
Shares |
|
|
Cash |
|
|
Art works |
|
|
Minus Dividend Receivable |
|
|
|
XXX |
|
|
xxxx |
|
|
|
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