Yoshi Ltd acquired 70% of the share capital of Wario Ltd for $210,000
On 1 July 2016, Yoshi Ltd acquired 70% of the share capital of Wario Ltd for $210,000. At thisdate, the equity of Wario Ltd consisted of: $Share capital 170,000 General reserve 30,000 Retained earnings 50,000 At the date of acquisition all assets and liabilities of Wario Ltd were carried in their accountingrecords at fair values with the exception of a block of land with the fair value being $25,000above the carrying amount. Additional information: (a)On 1 January 2017, Wario Ltd purchased inventory from Yoshi Ltd for $20,000 at amark-up of 25%. By 30 June 2017, Wario Ltd still held inventory that it had bought fromYoshi Ltd for $8,000. (b)The transfer to the general reserve by Wario Ltd during the year was from post-acquisition retained…
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