Company Accounting: Acquisition Analysis, Consolidation Worksheet and Statement

This document provides an acquisition analysis, BCVR and pre-acquisition entries, consolidation worksheet journal entries, and consolidated statement for Company Accounting. It includes information on share capital, general reserve, retained earnings, inventory, land, plant, accounts receivable, and goodwill.

Running head: COMPANY ACCOUNTING
Company Accounting:
Name of the Student:
Name of the University:
Author’s Note:

1COMPANY ACCOUNTING
Table of Contents
Acquisition Analysis: ................................................................................................................. 2
BCVR and Pre-acquisition entry as at 1July 2013: ................................................................... 2
BCVR and Pre-acquisition entries as at 30 June 2017: ............................................................. 3
Consolidation worksheet journal entries as at 30 June 2017: .................................................... 4
Consolidation worksheet: .......................................................................................................... 6
Consolidated Statement: ............................................................................................................ 8
Bibliography: ........................................................................................................................... 10

2COMPANY ACCOUNTING
Acquisition Analysis:
Acquisition analysis at 1 July 2013:
Share capital $ 3,80,000
General Reserve $ 70,000
Retained Earnings $ 62,000
Inventory 4000*(1-30%) $ 2,800
Land 5000*(1-30%) $ 3,500
Plant 5000*(1-30%) $ 3,500
Accounts receivable -2000*(1-30%) $ -1,400
Net fair value of identifiable assets $ 5,20,400
Cash paid $ 5,00,000
Brand name transferred $ 34,000
Dividend receivable $ -10,000
Purchase consideration transferred $ 5,24,000
Goodwill (524000-520400) $ 3,600
BCVR and Pre-acquisition entry as at 1July 2013:
Share capital $ 3,80,000
General Reserve $ 70,000
Retained earnings (01/07/2013) $ 62,000
Business combination valuation reserve $ 12,000
Shares in Duck Ltd $ 5,24,000
(Pre acquisition entry for investment in shares of Duck Ltd)
Dividend payable $ 10,000
Dividend receivable $ 10,000
(Pre acquisition entry for cumulative dividend)
Inventory $ 4,000
Deferred tax liability $ 1,200
Business combination valuation reserve $ 2,800
(BCVR entry for fair value of inventory)
Land $ 5,000
Deferred tax liability $ 1,500
Business combination valuation reserve $ 3,500

3COMPANY ACCOUNTING
(BCVR entry for fair value of land)
Accumulated depreciation $ 3,000
Plant $ 3,000
(BCVR entry for fair value of plant)
Plant $ 5,000
Deferred tax liability $ 1,500
Business combination valuation reserve $ 3,500
(BCVR entry for fair value of plant)
Business combination valuation reserve $ 1,400
Deferred tax assets $ 600
Accounts receivable $ 2,000
(BCVR entry for accounts receivable)
Business combination valuation reserve $ 3,600
Goodwill $ 3,600
(BCVR entry to record goodwill)
BCVR and Pre-acquisition entries as at 30 June 2017:
Share capital $ 3,80,000
General Reserve $ 70,000
Retained earnings (01/07/2013) $ 62,000
Business combination valuation reserve $ 12,000
Shares in Duck Ltd $ 5,24,000
(Pre acquisition entry for investment in shares of Duck Ltd)
Dividend payable $ 10,000
Dividend receivable $ 10,000
(Pre acquisition entry for cumulative dividend)
Accumulated depreciation $ 3,000
Plant $ 2,000
Deferred tax liability 5000*30% $ 1,500
Business combination valuation reserve $ 3,500
(BCVR entry for plant)
Gain on sale of land $ 2,000

4COMPANY ACCOUNTING
Income tax expense $ 600
Transfer from BCVR $ 1,400
(BCVR entry for sale of land at a profit)
Consolidation worksheet journal entries as at 30 June 2017:
1. Sales and profit in closing inventory
Sales revenue $ 30,000
Cost of sales $ 30,000
Sales revenue $ 30,000
cost of sales $ 20,000
Inventory $ 10,000
Deferred tax assets $ 3,000
Retained earnings (01/07/2016) $ 3,000
2. Profit included in equipment
Retained earnings (01/07/2016) $ 3,000
Equipment $ 3,000
Deferred tax assets $ 900
Retained earnings (01/07/2016) $ 900
Accumulated depreciation 3000*10%*1/12 $ 25
Deferred tax liability $ 8
Retained earnings (01/07/2016) $ 18
Accumulated depreciation 3000*10% $ 300
Income tax expense $ 90
Depreciation expense $ 210
3. Unrealised profit on opening inventory
Inventory $ 7,000
Cost of goods sold $ 7,000
Income tax expense $ 2,100
Current tax payable $ 2,100
4. Intercompany payment of dividend
Dividend income $ 16,000

5COMPANY ACCOUNTING
Dividend $ 16,000
Dividend payable $ 9,000
Dividend receivable $ 9,000
5. Intercompany revenues and expenses
Interest income $ 1,200
Interest expense $ 1,200
Service revenue $ 4,800
Service expense $ 4,800

6COMPANY ACCOUNTING
Consolidation worksheet:
Particulars Donald Ltd Duck Ltd R
e
f
Consolidation
entry Consolidated Balance
DR CR DR CR DR CR DR CR
Sales Revenue 11,92,500 9,32,500 1 60,000 20,65,000
Cost of Sales 8,88,000 6,76,000 1 50,000 15,14,000
Wages and
Salaries 61,000 32,000 z 93,000
Depreciation
Expense 5,200 4,800 2 210 9,790
Service Expense 3,500 4,800 2 4,800 3,500
Interest Expense 7,000 1,200 5 1,200 7,000
Other Expenses 4,000 6,000 10,000
Gain on Sale of
Non Current
Ass
7,000 7,000
Service
Revenue 4,800 5,000 5 4,800 5,000
Interest
Revenue 1,200 7,000 5 1,200 7,000
Dividend
Revenue 16,000 4 16,000 -
Income tax
expense 97,120 1,18,480
2
,
3
2,010 2,17,610
Retained
Earnings 1/7/16 1,00,820 70,280
1
,
2
68,800 3,918 1,06,218
Dividend Paid 10,000 7,000 4 7,000 10,000
Dividend
Declared 12,000 9,000 4 9,000 12,000
Share Capital 5,00,000 3,80,000 3,80,000 5,00,000
General Reserve 1,46,000 70,000 70,000 1,46,000
Other Equity
1/7/16 4,000 12,000 16,000
Gains on
Financial Assets
(OCI)
1,000 6,000 7,000
Loan Payable to
Donald Ltd 16,000 16,000 -
Deferred Tax
Liability 52,000 30,000 2 8 82,008
Dividend
Payable 12,000 9,000 4 9,000 12,000
Shares in Duck
Ltd 5,24,000 5,24,000 -
Cash 86,000 1,47,500 2,33,500
Inventories 1,69,500 36,000
1
,
3
7,000 10,000 2,02,500
Other Current
Assets 11,000 3,00,000 3,11,000
Dividend
Receivable 9,000 4 9,000 -
Loan receivable
from Duck Ltd 16,000 16,000 -

7COMPANY ACCOUNTING
Financial Assets 15,000 68,000 83,000
Plant and
Equipment 52,000 28,000 80,000
Acc.
Depreciation
Plant
10,000 14,000 2 325 23,675
Land 70,000 1,20,000 1,90,000
20,40,320 20,40,320 15,58,780 15,58,780 6,35,135 6,35,135 29,76,900 29,76,900

8COMPANY ACCOUNTING
Consolidated Statement:
Consolidated Income Statement
Sales Revenue 20,65,000
Cost of Sales 15,14,000
Gross Profit 5,51,000
Other Income:
Gain on Sale of Non Current Ass 7,000
Service Revenue 5,000
Interest Revenue 7,000
Total Income 5,70,000
Operating expenses:
Wages and Salaries 93,000
Depreciation Expense 9,790
Service Expense 3,500
Interest Expense 7,000
Other Expenses 10,000
Total Expenses 1,23,290
Profit before tax 4,46,710
Income tax expense 2,17,610
Profit after tax 2,29,100
Consolidated Balance Sheet
Current Assets:
Cash 2,33,500
Inventories 2,02,500
Other Current Assets 3,11,000
Total current assets 7,47,000
Non current assets:
Financial Assets 83,000
Plant and Equipment 80,000
Acc. Depreciation Plant -23,675
Land 1,90,000
Total non current assets 3,29,325
Total Assets 10,76,325
Liabilities:
Deferred Tax Liability 82,008
Dividend Payable 12,000
Total Liability 94,008

9COMPANY ACCOUNTING
Owners' Equity:
Share Capital 5,00,000
General Reserve 1,24,000
Retained Earnings 1/7/16 3,35,318
Other Equity 1/7/16 16,000
Gains on Financial Assets (OCI) 7,000
Total Equity 9,82,318
Total of liabilities and equity 10,76,325

10COMPANY ACCOUNTING
Bibliography:
Bisogno, M., Santis, S., & Tommasetti, A. (2015). Public-Sector consolidated financial
statements: An analysis of the comment letters on IPSASB’s exposure draft no.
49. International Journal of Public Administration, 38(4), 311-324.
Hadi, K. T. (2015). Consolidated financial statements.