Gilberts ltd acquired all the issued shares | My Assignment Tutor

On 1 July 2019, Gilberts ltd acquired all the issued shares (cum div.) of potoroo Ltd for $50 000. At this date, the equity of potoroo Ltd consisted of: Share capital           $25000 Retained earnings    $7500 At this date, Potoroo Ltd has recorded a dividend payable of $ 7500 which was paid in August 2019. All the identifiable assets and liabilities of Potoroo Ltd were recorded at amounts equal to fair values except for inventory for which the fair value was $1000 greater than carrying amount. Only 10% of the inventory on hand at 1 july 2019 remained unsold by 30 june 2020. The tax rate is 30%. During the 2019-20 period, the following transactions occurred. Gilberts Ltd sold inventory to Potoroo Ltd for $30 000 at a profit before tax $6000. At 30 June 2020, inventory which was sold to Potoroo Ltd for $12 500 at a profit before tax of $2500 was still on hand in the records of Potoroo Ltd.On 1 January 2020, Gilberts Ltd sold machinery to Potoroo Ltd sold machinery to Potoroo Ltd at a gain of $5000. The machinery was considered to have a further 5-year life.During the period Potoroo ltd rented a warehouse from Gilberts Ltd, paying $1250 in rent to Gilberts Ltd.During the period Gilberts ltd recorded gains from revaluation of land, which is measured using the fair value method. These gains increased the asset revaluation surplus by $2000 to give a balance of $14000 at 30 June 2020.In June 2020, an impairment test was conducted on Potoroo Ltd and resulted in the recognition of impairment losses on goodwill of $8000 (recognised in other expenses). The following financial information was provided by the companies at 30 June 2020:                                                                              Gilberts Ltd                        Potoroo Ltd Sales Revenue                                                   62 500                                   59000 Dividend revenue                                              2500                                             – Other income                                                     2500                                      5000 Gains on sale of non-current assets               2500                                      5000   Total income                                                      70000                                     69000   Costs of sales                                                     (52500)                                   (45000) Other expenses                                                  (75000)                                 (2500)  Total expenses                                                 (60000)                                  (47500)profit before income tax                                  10000                                   21500 Income tax expense                                          (3375)                                   (4875)   Profit for the year                                             6625                                       16625   Retained earnings (1/7/19)                         15000                                            7500                                                                            21625                                         24125 Dividend Paid:                                                  (6250)                                        (2500)                                         Retained earnings (30/6/20)                             $15375                                   $21625                                     Required: Acquisition analysis at July 1st, 2019Prepare consolidation journal entries at 30 June 2020 (Business Combination valuation reserve, pre-acquisition equity and intragroup transactions.Complete a consolation worksheet (worksheet will be uploaded to Moodle in week 4)Prepare the consolidation financial statements at 30 June 2020

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