Cena Ltd acquired 80% of the shares of Lesnar Ltd
On 1 July 2016, Cena Ltd acquired 80% of the shares of Lesnar Ltd for $40 000. The following balances appeared in the records of Lesnar Ltd at this date: Share Capital $20 000 General Reserve 2 000 Retained Earnings 10 000 At 1 July 2016, all the identifiable assets and liabilities of Lesnar Ltd were recorded at fair value except for the following: Carrying amount Fair value Machinery (cost $36 000) $30 000 $40 000 Inventory 16 000 20 000 Receivables 20 000 18 000 The machinery, which had a remaining useful life of 5 years, was adjusted to fair value after the acquisition date in the consolidation worksheet. The machinery was sold by Lesnar Ltd on 1…
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