Question 

At 1 July 2014, Pavo Ltd acquired 60% of the shares of Octans Ltd for $153 000 on a cum div. basis. Pavo Ltd had acquired 40% of the shares of Octans Ltd two years earlier for $80 000. This investment, classified as a financial asset, was recorded at a fair value on 1 July 2014 of $102 000. The changes in fair value had all been taken to other comprehensive income. At 1 July 2014, the equity of Octans Ltd consisted of:

Share capital                                                                                  $160 000

Retained earnings                                                                               40 000

At this date, the identifiable assets and liabilities of Octans Ltd were recorded at fair value except for:

Carrying amount                                            Fair value

Inventory                              $ 40 000          $ 44 000

Plant (cost $120 000)              100 000              105 000

At 1 July 2014, Octans Ltd's assets and liabilities included a dividend payable of $5000, and goodwill of $6000 (net of $4000 accumulated impairment losses). An analysis of the unrecorded intangibles of Octans Ltd revealed that the company had unrecorded internally generated brands, considered to have a fair value of $50 000. Further, Octans Ltd had expensed research outlays of $80 000 that were considered to have a fair value of $20 000. In its financial statements at 30 June 2014, Octans Ltd had reported a con­tingent liability relating to a potential claim by customers for unsatisfactory products, the fair value of the claim being $10 000.

The tax rate is 30%.

Required

Prepare the acquisition analysis at 1 July 2014, and the consolidation worksheet entries for preparation of consolidated financial statements of Pavo Ltd at that date.