Question 2 On 1 July 2019, Burger Ltd acquired 80% of the shares (cum div.) of Sandwich Ltd for…

Question 2 On 1 July 2019, Burger Ltd acquired 80% of the shares (cum div.) of Sandwich Ltd for $52,000. At this date the equity of Sandwich Ltd consisted of Share capital $ 30,000 General reserve 3,000 Retained earnings 15,000 At the date of the business combination, all the identifiable assets and liabilities of Sandwich Ltd had carrying amounts equal to their fair values except for: Carrying Fair value amount Plant (cost $60 000) $40,000 $45,000 Inventory 25,000 26,000 Receivables 33,000 30,000 The plant had a further useful life of 5 years. It was sold to Bubble Ltd on 1 May 2021 for $30,0

Question 2 On 1 July 2019, Burger Ltd acquired 80% of the shares (cum div.) of Sandwich Ltd for $52,000. At this date the equity of Sandwich Ltd consisted of Share capital $ 30,000 General reserve 3,000 Retained earnings 15,000 At the date of the business combination, all the identifiable assets and liabilities of Sandwich Ltd had carrying amounts equal to their fair values except for: Carrying Fair value amount Plant (cost $60 000) $40,000 $45,000 Inventory 25,000 26,000 Receivables 33,000 30,000 The plant had a further useful life of 5 years. It was sold to Bubble Ltd on 1 May 2021 for $30,000. At 30 June 2020, all the inventory was sold to entities outside the group. Also, by 30 June 2020, receivables of $30,000 had been collected. One of the liabilities of Sandwich Ltd at 1 July 2019 was dividend payable of $10,000. The dividend was paid in August 2019. The tax rate is 30%. Burger Ltd uses the partial goodwill method. Additional information (a) At 30 June 2020, inventory of Burger Ltd included assets sold to it by Sandwich Ltd for $13,000, recording a before-tax profit of $500. Half of these items remain on hand at 30 June 2021. 6) During the 2020-21 year, Sandwich Ltd had sold inventory to Burger Ltd for $60,000. The mark-up on sales was 25% on selling price. At 30 June 2021, Burger Ltd still had some of this inventory on hand, amounting to items acquired from Sandwich Ltd for $3,000 (d) Financial information provided by Sandwich Ltd concerning events affecting it during the 2020-21 year was as follows: Profit for the year $23,400 Retained earnings at 1 July 2020 35,000 Retained earnings at 30 June 2021 $53.400 Required Prepare the consolidation worksheet entries for the preparation of the consolidated financial statements of Burger Ltd at 30 June 2021 in accordance to IRFS 10/AASB 10 Consolidated Financial Statements and IRFS 3 AASB 3 Business Combinations. Show all workings and narrations (Hint: Check for hidden information). 25 marks

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