1.Acquisition analysis At 30 June 2018:.

1.Acquisition analysis At 30 June 2018:
Net fair value of identifiable assets and liabilities of Darren Ltd
= ($54000 + $36000 + $18000) (equity) + $1500 (1 – 30%) (plant) + $2000 (1 – 30%)
(inventory)
= $110450
Consideration transferred = $110000
Gain on bargain purchase = $450
1. Business combination valuation entries
Accumulated depreciation Dr 7500
Plant & machinery Cr 6000
Deferred tax liability Cr 450
Business combination valuation reserve Cr 1050
Depreciation expense Dr 300
Accumulated depreciation Cr 300
(1/5 x $1 500)
Deferred tax liability Dr 90
Income tax expense Cr 90
(30% x $300)
Cost of sales Dr 1 800
Income tax expense Cr 540
Transfer from business combination Cr 1260
valuation reserve
Inventory Dr 200
Deferred tax liability Cr 60
Business combination valuation reserve Cr 140
2. Pre-acquisition entries
At 1 July 2017:
Retained earnings (1/717) Dr 36000
Share capital Dr 54000
Asset revaluation surplus Dr 18000
combination valuation reserve Dr 2450
Gain on bargain purchase Cr 450
Shares in Darren Ltd Cr 110000