ACCT20073 – ‘X’ Ltd acquired on 1 July 2019 all the issued shares
‘X’ Ltd acquired on 1 July 2019 all the issued shares (cum div.) of ‘Y’ Ltd for $33 000. At this date, the equity of ‘Y’ Ltd was as follows. Share capital $20 000 General reserve 2 000 Retained earnings 5 000 All the identifiable assets and liabilities of ‘Y’ Ltd were recorded at amounts equal to their fair values except for the following. Carrying amount Fair value Plant (cost $22 000) $18 000 $18 600 Land 19 000 21 000 Inventories 2 000 2 800 The plant’s expected remaining useful life was 5 years with benefits being expected evenly over that period. The plant was sold on 1 January 2022 for $18 700. The land was sold in February 2021 for $25 000. Of the inventories, 90% was sold by 30 June…
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