ACC521 Final exam | My Assignment Tutor

ACC521 Final exam – Semester 1 2018 Question 1 (30 marks total) On 1 July 2017, Chancellor Ltd purchased 90% of the issued shares of Park Ltd for $800,000. At this date, the fair value of the NCI was $88,500. The following balances appeared in the records of Park Ltd at this date: Share capital$400,000General reserve    40,000Retained earnings  200,000 At 1 July 2017, all the identifiable assets and liabilities of Park Ltd were recorded at fair value except for the following:  Carrying amountFair valueEquipment (cost $720,000) Inventories$600,000 320,000$800,000 400,000Land360,000400,000 The equipment had a remaining useful life of 4 years beyond 1 July 2017, with benefits to be received on a straight-line basis over the period. By 30 June 2018, all the inventories were sold externally. Any adjustments for differences at acquisition date between carrying amounts and fair values are made in the consolidation worksheet. For the year ended 30 June 2019, the following information is available: (a) During the year, Park Ltd sold inventory to Chancellor Ltd for $800,000. The original cost of the inventory was $640,000. At 30 June 2019, Chancellor Ltd had 20% of the inventory on hand. (b)  On 1 January 2019, Park Ltd sold an item of equipment to Chancellor Ltd for $20,000 at a before-tax profit of $4,000. Chancellor Ltd treated the asset as part of its inventory and it was still on hand at 30 June 2019. (c)   On 1 July 2018, Chancellor Ltd sold some equipment to Park Ltd for $40,000. The carrying amount of the equipment at this date was $24,000. Park Ltd treated the asset as a non-current asset and depreciated it using the straight-line method over 5 years. (d) The tax rate is 30%. (e) Financial information for Park Ltd for the year ended 30 June 2019 includes the following: Profit after tax Retained earnings (1/7/18) 312,000  400,000  712,000Interim dividend paid 160,000Final dividend declared   80,000  240,000Retained earnings (30/6/19) $472,000 Required: Prepare the following for the preparation of consolidated financial statements for Chancellor Ltd and its subsidiary Park Ltd for the year ended 30 June 2019 assuming that Chancellor Ltd uses the full-goodwill method: Acquisition analysis                                                                             (3 marks)Business combination valuation reserve (BCVR) worksheet entries      (7 marks)Pre-acquisition worksheet entry                                                         (3 marks)                            (6 marks).                                  (11 marks) SHOW ALL OF YOUR CALCULATIONS/WORKINGS IN THE ANSWER BOOKLETS


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