On 1 July 2014 Padda Ltd acquired all the issued shares (cum div) of Slang Ltd. At this date the statement of financial position of Slang Ltd included the following information:

 

  Carrying amount Fair value
Assets    
Cash $   7 500 $    7 500
Receivables 22 800 22 800
Inventories 22 500 28 500
Goodwill 7 200  
Plant and Equipment 300 000 264 600
Accumulated depreciation – plant and equipment (38400)  
Total assets $321 600  
     
Liabilities    
Dividend payable 12 000 12 000
Provisions 28 800 28 800
     
Equity    
Share capital (180 000 shares) 180 000  
General reserve 34 800  
Retained earnings 66 000  
Total equity and liabilities $321 600  

 

 

The following information relate to the acquisition on 1 July 2014:

  • In exchange for the shares in Slang Ltd, Padda Ltd gave the following as consideration:
    • 75 000 shares in Padda Ltd, each share having a fair value of $2.00 per share.
    • Cash of $60 000.
    • Artworks having a fair value of $90 000.
  • Padda Ltd incurred legal and accounting costs of $7 500 and share issue costs of $6 000.
  • The plant and equipment was considered to have a further 10-year life and is depreciated on a straight-line basis.
  • The goodwill on hand at 1 July 2014 was written off as the result of an impairment test conducted in June 2016.
  • All the inventories on hand at 1 July 2014 were sold by 30 June 2015.
  • The dividend on hand at 1 July 2014 was paid in August 2014.
  • The assets recognised by Slang Ltd did not include an internally generated patent of Slang Ltd that was valued by Padda Ltd at $15 000. Its useful life was considered to be 5 years, with benefits being received equally over that period.

Other information:

  • In January 2018, Slang Ltd paid a bonus dividend of $60 000, being one share for every three shares held, the dividend being paid from retained earnings on hand at 1 July 2014.
  • The tax rate is 30%.

 

Required

(a)  Prepare the acquisition analysis on 1 July 2014.

(b) Prepare the consolidation journal entries for Padda Ltd’s group at 1 July 2014 and at 30 June 2019.

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