Journal Entries for Acquisition Analysis, Investment Calculation and Transaction A and B

ANSWER 1
Acquisition Analysis:
Share Capital 300000
Retained Earnings 20000
Value of Identifiable Assets 320000
Add: Fair Value Adjustment 15000
Fair Value of Net Identifiable Assets 335000
Consideration transferred 305600
Value of Business 382000
Value Of Goodwill 47000
NCI Interest 75000
Gain on Acquisition 28000
Peaceful Ltd
Journal
Date Particulars Debit Credit
30-6-19 Retained Earnings 30000
Share Capital 20000
Business Combination Valuation Reserve 88600
Non Controlling Interest 75000
Gain on Acquisition of Business 28000
Purchase Consideration Transferred 305600
(Acquisition Entry)
30-6-19 Retained Earnings 66000
Accumulated Depreciation-Machinery 66000
(To record accumulated Depreciation on
machinery in the previous year)
30-6-19 Deffered Tax Assets 19800
Retained Earnings 19800
(to record tax effect on above)
30-6-19 Depreciation Expense 24750
Accumulated Depreciation-Machinery 24750
(To record accumulated depreciation on
machinery for the current year)
30-6-19 Current Tax Liability 7425
Income Tax Expenses 7425
(To record tax effect on above)
30-6-19 Retained Earnings 4000
Plant 4000
(To eliminate profit on sale of plant inter-
company)
30-6-19 Deferred Tax Assets 1200
Retained Earnings 1200
(To record tax effect on above)

30-6-19 Accumulated Depreciation-Plant 120
Retained Earnings 120
(To eliminate depreciation charged on
above)
30-6-19 Retained Earnings 36
Deferred Tax Liability 36
(To eliminate tax effect on above)
30-6-19 Sales Revenue 500
Cost of Sales 500
(To eliminate inter company sale of
inventory)
30-6-19 Sales Revenue 12000
Cost of Sales 11500
Inventory 500
(To eliminate inter company sale)
30-6-19 Current Tax Liability 150
Tax Expenses 150
(To record tax effect on above)
30-6-19 Retained Earnings 4000
Goodwill 4000
(To write down the value of Goodwill)
30-6-19 Deferred tax Assets 1200
Retained Earnings 1200
(To record tax effect on above)
ANSWER 2
Acquisition analysis at 1 July 2018:
Net fair value of identifiable assets
and liabilities of Binny Ltd = ($250000+$175000) (equity)
= $425000
Shares of Abby Ltd(30%) = $127500
Consideration transferred = $160000
Goodwill = $32500
Calculation of Carrying Amount of
Investment at 1 july 2019:
Investment in Binny Ltd $127500
Add: Goodwill = $32500
Cost of Investment = $160000