ACF2100 Financial Accounting
On 1 July 2019, Miguel Ltd acquired all of the shares of Antonio Ltd, on a cum-div. basis, for
$8,100,000. At this date, the equity and liability sections of Antonio Ltd’s statement of
financial position showed the following balances:
Share capital – 1 200 000 shares $ 3,600,000
General reserve 1,050,000
Retained earnings 2,880,000
Revaluation surplus 180,000
Dividend payable 75,000
At 1 July 2019, Antonio Ltd’s assets included $138 000 of recorded goodwill. The dividend
payable at acquisition date was subsequently paid in August 2019.
At acquisition date, all the identifiable assets and liabilities of Antonio Ltd were recorded at
amounts equal to fair value except for the following:
Carrying amount Fair value
Land $1,500 000 $1,650 000
Inventory 135 000 165 000
Plant (cost $900 000) 720 000 840 000
The inventory on hand in Antonio Ltd at 1 July 2019 was sold in November 2019. The plant
was estimated to have a further 5-year life with zero residual value. The land on hand at
acquisition date was sold to Laraniva Ltd in March 2021.
On 30 June 2020, goodwill was impaired by $2 500. The tax rate is 30%.
During the period 1 July 2019 to 30 June 2021, the following intragroup transactions have
occurred between Miguel Ltd and Antonio Ltd:
(T1) At 30 June 2020, Miguel Ltd approved and declared a final dividend of $45,000, and
Antonio Ltd declared and approved a final dividend of $75,000. This dividend was paid
on 25 July 2020.
(T2) At 30 June 2021, Miguel Ltd approved and declared a final dividend of $36,000, and
Antonio Ltd declared and approved a final dividend of $54,000.
(T3) On 1 January 2020, Miguel Ltd provided a $1,500,000 loan to Antonio Ltd. The interest
rate on this loan is 10%, and interest is paid each year on 30 June. At 30 June 2021, no
principal repayments have been made on the loan.
(T4) Miguel Ltd issued 2 000 5% debentures of $150 at nominal value on 1 April 2021.
Antonio Ltd acquired 1 000 of these debentures. Interest is payable on 1 July each year.
DETAILED ASSIGNMENT
