Parent Ltd acquired 100% interest in Subsidiary Ltd
Parent Ltd acquired 100% interest in Subsidiary Ltd on 1 January 2019. At that date, Subsidiary Ltd’s net assets were represented by its shareholders’ equity consisting of share capital of $100,000 and retained earnings of $70,000. On the date of the acquisition, Parent Ltd and Subsidiary Ltd agreed the following; Subsidiary’s Land had a fair value of $180,000 (carrying amount $100,000). Subsidiary had a patent with a fair value of $100,000 (was not previously recognised in Subsidiary’s book). The patent is to amortise over 10 years on straight line basis. Subsidiary had inventories that were $30,000 lower than fair value. These inventories were sold by 30 June 2019. The following intra-company transactions occurred during the year ending 30 June 2020. On…
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