Business combination valuation entries, pre-acquisition entries
Business combination valuation entries, pre-acquisition entries On 1 July 2016, Merelyn Ltd acquired all the issued shares of Cathy Ltd for $220 800. At this date the equity of Cathy Ltd consisted of share capital of $100 000 and retained earnings of $58 800. All the identifiable assets and liabilities of Cathy Ltd were recorded at amounts equal to fair value except for: Carrying amount Fair value Patent $70 000 $72 000 Plant (net of $40 000 depreciation) 40 000 60 000 Inventory 21 600 28 000 The patent was considered to have an indefinite life. It was calculated that the plant had a further life of 10 years, and was depreciated on a…
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