Corporate Accounting Question

Consolidation worksheet

Ethan Ltd acquired all the issued shares (ex div.) of Darren Ltd on 1 July 2017 for

$110 000. Atthis date Darren Ltd recorded a dividend payable of $10 000 and equity of:

All the identifiable assets and liabilities of Darren Ltd were recorded at amounts equal to theirfair values at acquisition date except for:

The machinery was considered to have a further 5-year life. Of the inventory, 90% was sold by30 June 2018. The remainder was sold by 30 June 2019.

Both Darren Ltd and Ethan Ltd use the valuation method to measure the land. At 1 July 2017,the balance of Ethan Ltd’s asset revaluation surplus was $13 500.

In May 2018, Darren Ltd transferred $3000 from the retained earnings at 1 July 2017 to ageneral reserve.

The tax rate is 30%.

The following information was provided by the two companies at 30 June 2018.

Required:

1- Acquisition Analysis at 30 June 2018.

2- Worksheet Adjustment journal entries at 30 June 2018.

3- Complete Worksheet.