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Accounting Assignment | Calculate Acquisition Analysis

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Added on  2020-05-28

Accounting Assignment | Calculate Acquisition Analysis

   Added on 2020-05-28

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Solution 1. Calculate Acquisition analysis for Tuna Ltd = equity +[ Net value Inventory + Net value patents + Net value Plant ]*(1-tax rate)=(66000 + 6000) + [ 4500 + 3000 + 15000]* (1 – 30%) = 87750Therefore, net fair value of Brim Ltd is $87,750Goodwill = consideration transferred by Tuna – net fair value of Brim=90,000-87,750=$2,250Solution 2. Prepare consolidation journal entries for Tuna Ltd1. Entries- Business combination valuationDrCrAccumulated depreciation 30,000Plant 27,000Deferred tax liability 900Business combination valuation reserve (BCVR)2,100Depreciation expense 600Retained earnings (1/7/2016) 600Accumulated depreciation 1,200Deferred tax liability 360Income tax expense 180Retained earnings (1/7/2016)180Goodwill 2,250BCVR 2,2502 Entries - Pre-acquisitionDrCrRetained earnings (1/7/2015) 6,000Share capital 66,000BCVR 18,000Shares in Brim Ltd 90,000Retained earnings (1/7/2016)(6000 + 3150 + 10500) 19,650Share capital 66,000Business combination valuation reserve 4,350
Accounting Assignment | Calculate Acquisition Analysis_1
Shares in Brim 90,0003. Entries - Sales profit for closing inventoryDrCrSales revenue 21,000Cost of sales 21,000Sales revenue 4,500Cost of sales 4,200Inventory 300Deferred tax asset 90Income tax expense 904. Entries - Profit for opening inventory (Brim)DrCrRetained earnings (1/7/2016)420Income tax expense 180Cost of sales 6005. Entries- Sale of Plant (current) DrCrProceeds from sale plant 15,000Carrying amount of plant sold 14,000Plant 1,000Deferred tax asset 300Income tax expense 300Accumulated depreciation 100Depreciation expense 100Income tax expense 30Deferred tax asset 306. Entries -Sale of Plant (prior period) DrCrRetained earnings (1/7/16) 1,400Deferred tax asset 600Plant 2,000
Accounting Assignment | Calculate Acquisition Analysis_2

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