Part A

On 1 July 2019, James Ltd acquired all the issued shares of Kelly Ltd for $200,000. At this date, the financial statements of Kelly Ltd showed the following:  

At acquisition date, all the net identifiable assets and liabilities in Kelly Ltd were recorded at amounts equal to their fair value except for:

The records also showed that the company had recorded existing goodwill of $15,000.

The Plant was calculated to have a further life of 5 years, and was depreciated on a straightline basis. All inventory was sold by 30 June 2020. Assume 30% tax rate

Required:

(a) Prepare the acquisition analysis at 1 July 2019. 

(b) Prepare the general journal entries at acquisition date, 1 July 2019. Include narrations for each entry. 

(c) Prepare the consolidation worksheet as at 1 July 2019. 

(d) Prepare a Balance sheet for the reporting Group, James Ltd as at 1 July 2019 in narrative format.

Part B

Prepare a video presentation to address each of the following questions. You will be assessed on your technical understanding of each question and also your presentation skills. Please refer to the marking rubric which details the assessment criteria for the communication and

presentation skills. You may use visual aids to support your presentation, however you must be seen at all times in front of the camera. Marks will not be awarded if you read directly from your notes. Please introduce yourself and the purpose of your presentation. Speak slowly and clearly to address each of the following:

1. Explain each of the steps involved in preparing your acquisition analysis in Question 1(a). (10 marks)

2. Explain the Business Combination entry you have prepared for the Plant information given in Question 1 and below. Explain each account and the amount you have used

3. Discuss each account and amount you have used in your pre-acquisition entry. Explain why you have debited or credited that particular account and amount. What is the reason for each line in your journal entry?

4. Consolidation worksheet: Explain to your audience how you prepared the Group column in the worksheet. Use the Group’s equity accounts as an example of how these were calculated and what do these balances represent at acquisition date. 

5. Explain the closing balance of Accumulated Depreciation (Plant) for the Group column. How has this closing balance been calculated? Why is it not the same figure as the closing Accumulated Depreciation balance for the Subsidiary? 

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