Corporate accounting and reporting

Currently using book applying international financial reporting standards written by Wiley.

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% ofthe shares of Octans Ltd two years earlier for $80000. This investment, classified as a financial asset, was
recorded as a fair value on 1 July 2014 of $ 102,000. The changes in fairvalue had all been taken to other comprehensive rncome. At1 July
2014, the equity of Octans Ltd consisted of:

Share capital 35 160,000

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 v alue

Inventory $ 40,000. $. 44,000

Plant(cost

$120,000). $100,000 $105,000

At 1 July 2014, Octans ltd assets and liabilities included a

dividend payable of $5000, and goodwill of $6000 5 net of $4000 accumulated impairment losses). An analysis of the unrecorded intangibles
Octans ltd revealed that the company had unrecor ed internally generated brands, considered to have a fair v alue of $ 50,000. Further,
Octans ltd had expensed research outlays of $80,000 that were considered to have a fair value of $ 20000. In its financial statement
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%.

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