Gaming Ltd acquired a 30% interest in Movies Ltd for $165 000 cash on 1 July 2022. The directors of Gaming Ltd believe that their company has significant influence over Movies Ltd. The equity of Movies Ltd at the acquisition date was as follows.
| Share capital | $145 000 |
| Retained earnings | 380 000 |
All the identifiable assets and liabilities of Movies Ltd were recorded at fair value. Profits and dividends of Movies Ltd for the years ended 30 June 2023 to 30 June 2025 were as follows.
| Profit before tax | Income tax expense | Dividends paid | ||||
|---|---|---|---|---|---|---|
| 2023 | $ | 80 000 | $ | 25 000 | $ | 20 000 |
| 2024 | 100 000 | 38 000 | 30 000 | |||
| 2025 | 120 000 | 40 000 | 40 000 |
Required:
- Produce acquisition analysis for Gaming Ltd for the acquisition of 30% interest in Movies Ltd.
- Prepare journal entries in the records of Gaming Ltd for each of the years ended 30 June 2023 to 30 June 2025 in relation to its investment in the associate, Movies Ltd. (Assume Gaming Ltd does not prepare consolidated financial statements.)
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