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Assignment Question
Melissa Ltd purchased all the issued shares of Soren Ltd for $1078000 on 1 July 2020 when the equity of Soren Ltd was as follows;

Share capital 431200

General reserve 323400
Asset revaluation
surpluss 161700 916300

At this date, Soren Ltd had not recorded any goodwill, and all identifiable assets and liabilities were recorded at fair value except for the followings;

Account Cost Carrying Amount Fair value Further life(Years)

Inventories $32,300 $35,500
Land $81,000 $89,000
Machinery $125,000 $100,000 $120,000 8
Soren Ltd identified at acquisition date a lawsuit
Contingent Liability where Soren Ltd was sued by a former supplier with
the Fairvalue of: $13,000

Unrecorded Asset Soren Ltd had unrecorded and internally generated

Patent with the FairValue of: $32,000

Soren Ltd had unrecorded and internally generated

Unrecorded Asset in-process research and development with the
FairValue of: $24,000

40% of inventory were sold by 30 June 2021. Further life of the assets are listed on the above table. Tax rate:30%.

Required
1.Prepare the acquisition analysis at acquisition date.
2.Prepare adjusting journal entries for the consolidation worksheet at acquisition date.
3.Prepare adjusting journal entries for the consolidation worksheet on 30 June 2021.

If Melissa Ltd purchased just 96% of the issued shares of Soren Ltd , partial goodwill method is under use and the NCI at acquisition date is measured based on the proportionate share of the
identifiable assets and liabilities in Soren Ltd.

Required
4. Prepare the acquisition analysis at acquisition date.
5. Prepare the business combination valuation entries and pre-acquisition entry at acquisition date.
6. Prepare the journal entry to recognise NCI at acquisition date.
7. Prepare the consolidation worksheet entries at 30 June 2021. Assume a profit for Soren Ltd for the year ended 30 June 2021 of $1096200 and no other changes in Soren
Ltd’s equity since the acquisition date.

8. Explain in details;
a)Why is it necessary to make consolidated worksheet adjustments?
b)How often is it necessary to make consolidated worksheet adjustments?
c)Where should consolidated worksheet adjustment journals be posted?

9. List and explain the accounting standards issues relevant to the consolidation process both for full control and NCI.