(Answered)-Tutorial Questions Question 19.7 Business combination valuation - (2025 Updated Original AI-Free Solution

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Tutorial?Questions?Question?19.7?Business?combination?valuation?entries?and?pre-acquisition?entries?at?acquisition?date,?previously?held?shares?In?2012,?Stan?Ltd?acquired?40%?of?the?issued?shares?for?$72?000.?This?acquisition?did?not?give?Stan?Ltd?control?of?Lee?Ltd?as?the?ownership?of?Lee?Ltd?was?held?by?a?small?number?of?shareholders?as?Lee?Ltd?was?developed?as?a?family?company?in?2001.?On?1?July?2016,?Stan?Ltd?approached?these?family?members?following?a?death?in?the?family?and?persuaded?them?to?sell?the?remainder?of?the?shares?in?Lee?Ltd?to?Stan?Ltd?for?$137?700?on?a?cum?div.?basis.?Information?about?the?two?companies?at?1?July?2016?included?the?following.???Stan?Ltd?recorded?its?original?investment?in?Lee?Ltd?at?fair?value,?with?changes?in?fair?value?being?recognised?in?profit?or?loss.?At?1?July?2016,?the?asset?was?recorded?at?$91?800.???The?equity?of?Lee?Ltd?at?1?July?2016?consisted?of?$144?000?capital?and?$36?000?retained?earnings.???Included?in?the?assets?and?liabilities?recorded?by?Lee?Ltd?at?1?July?2016?were?goodwill?of?$5400?(net?of?accumulated?impairment?losses?of?$3600)?and?dividend?payable?of?$4500?.???On?the?acquisition?date?all?the?identifiable?assets?and?liabilities?of?Lee?Ltd?were?recorded?at?carrying?amounts?equal?to?their?fair?values?except?for?inventory?for?which?the?fair?value?of?$39?600?was?$3600?greater?than?its?carrying?amount,?and?equipment?for?which?the?fair?value?of?$94?500?was?greater?than?the?carrying?amount,?this?being?cost?of?$108?000?less?accumulated?depreciation?of?$18?000.???Besides?determining?the?fair?values?of?the?recorded?assets?and?liabilities?of?Lee?Ltd,?Stan?Ltd?discovered?that?Lee?Ltd?had?two?assets?that?had?not?been?recorded?by?Lee?Ltd.?These?were?internally?generated?patents?that?had?a?fair?value?of?$45?000?and?in-process?research?and?development?for?which?Lee?Ltd?had?expensed?$90?000,?but?which?Stan?Ltd?valued?at?$18?000.?Further?in?the?financial?statements?of?Lee?Ltd?at?30?June?2016?Lee?Ltd?had?reported?the?existence?of?a?contingent?liability?relating?to?guarantees?for?loans.?Stan?Ltd?determined?that?this?liability?had?a?fair?value?of?$9000.???The?tax?rate?is?30%.?Required?Prepare?the?consolidation?worksheet?entries?for?consolidated?financial?statements?prepared?by?Stan?Ltd?at?1?July?2016

Acquisition analysis: 1 July 2016
Net fair value of identifiable assets
and liabilities of Lee Ltd

Consideration transferred
Previously held equity interest
Goodwill acquired
Unrecorded goodwill...