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22754 Corporate Accounting - Autumn 2025 Autumn 2025 Quiz 2-DO NOT ATTEMPT UNTIL INSTRUCTED TO DO SO
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On 1 May 2024 Dachshund Ltd completed a successful acquisition for Beagles Ltd. At the date of acquisition all the net assets of Beagles Ltd was at fair value except for the following: Carrying amount Fair value Inventory $75,000 $105,000 The inventory was sold during the financial year ended 30 June 2025. What consolidation adjustment is required at 30 June 2025 in relation to the revalued inventory?
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Step-by-Step Analysis
The scenario involves a fair value adjustment at acquisition where Beagles Ltd’s net assets were revalued to fair value for consolidation purposes. The inventory carried amount was $75,000, but its fair value was $105,000, creating a $30,000 upward adjustment (FV uplift) to the identifiable assets.
Key points to consider:
- The FV uplift to inventory increases the consolidated cost base of the inventory. When that inventory is subsequently sold in the group, the ......Login to view full explanationLog in for full answers
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