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Question 4 (24 marks) On 1 July 2020, Olivia Ltd acquired all the share capital...

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Question 4 (24 marks) On 1 July 2020, Olivia Ltd acquired all the share capital of Chloe Ltd for $50,000. The equity of Chloe Ltd at the acquisition date was: Olivia Ltd Chloe Ltd Asset revaluatin surplus $25,000 4,000 Retained earnings 14,500 2,800 Share capital 50,000 40,000 At this date, all identifiable assets and liabilities of Chloe Ltd were recorded at fair value except for the following Carrying amount Fair value Inventories $3,000 $3,500 Patent 4,000 4,800 Plant and equipment (original cost $80,000) 60,500 61,000 arch L My Sites My Library - IT Support Useful Links Mahara The patent was considered to have an indefinite life. All of the inventories were sold by 30 June 2021. The plant and equipment had a further 5-year useful life. Any valuation adjustments are made on consolidation. The income tax rate is 30% Required (a) Prepare the acquisition analysis at 1 July 2020. (4 marks) (b) Prepare the business combination valuation entries and pre- (14 marks) acquisition entries at 1 July 2020. (C) Prepare the pre-acquisition entries at 30 June 2021. (6 marks) C 1 A- iii III de TIL

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