Company Accounting 2019: Business Combination, Surplus on Fair Valuation

This document provides answers to questions related to company accounting, including business combinations and surplus on fair valuation. It includes journal entries and computations for various assets and liabilities. The document also discusses different forms of business combinations.

Company Accounting 2019
Table of Contents
Answer to Question No.1............................................................................................................................3
Answer to Question 1 (1).........................................................................................................................3
Answer to Question 1 (2).........................................................................................................................3
Answer to Question 1 (3).........................................................................................................................4
Answer to Question 1 (4).........................................................................................................................4
Answer to Question No.2 (Part A) (1)..........................................................................................................5
Answer to Question No.2 (Part A) (2)..........................................................................................................6
Answer to Question No.2 (Part B)...............................................................................................................7
Business Combination.............................................................................................................................7
Answer to Question No.3 (1).......................................................................................................................8
Answer to Question No.3 (2) & (3)..............................................................................................................9
Answer to Question No.3 (4).....................................................................................................................13
Answer to Question No.3 (5) (a)................................................................................................................14
Answer to Question No.3 (5) (b)................................................................................................................15
Answer to Question No.3 (5) (c)................................................................................................................16
Answer to Question No.4 (1).....................................................................................................................17
Answer to Question No.4 (2).....................................................................................................................18
Answer to Question No.4 (3).....................................................................................................................18
Answer to Question No.4 (4).....................................................................................................................19
Answer to Question No.4 (5).....................................................................................................................20
Bibliography...............................................................................................................................................23
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Company Accounting 2019
Answer to Question No.1
Answer to Question 1 (1)
In the books of Baby Shark Limited
Journal Entries
Date Particulars Debit ($) Credit ($)
30 June 2019 Retained Earnings 1,800
Deferred Tax Assets 1,800
(Being deduction of earlier years disallowed by
Australian Tax Officer)
Answer to Question 1 (2)
Baby Shark Limited
Computation of Tax for the year ended 30 June 2019
Particulars Amount ($) Amount ($)
Profit before tax (A) 92,550
Add: Expenses Disallowed in Tax (B)
Carrying amount of plant sold 30,000
Amortization of development costs 15,000
Depreciation expense - equipment 5,500
Depreciation expense – plant 24,000
Provision for employee benefits (Incremental Provision) 4,400
Doubtful debts expense 8,100
Entertainment expense 13,200
Goodwill impairment 2,000
Insurance expense 12,900
Proceeds from sale of plant 33,000
Warranty expense 1,500
Accrual for accounting fees (“g”) 4,500 154,100
Less: Expenses Allowed/Income Exempt in Tax (C)
Proceeds from sale of plant 33,000
Government grant (exempt income) 2,200
Development expenditure (125% of 45,000) (“j”) 56,250
Plant Depreciation (“d”) 28,800
Equipment Depreciation (“e”) 7,000
Carrying amount of plant sold (“c”) 26,000
Doubtful Debts 7,900
Warranties 600
Insurance Expenses (Paid in Current Year) 10,700 172,450
Taxable Income (A+B-C) 74,200
Tax on above @ 30% 22,260
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Company Accounting 2019
Answer to Question 1 (3)
All amounts in $
Baby Shark Limited
Computation of Deferred Tax for the year ended 30 June 2019
Particulars
Carrying
Amount as
per Books
(2019)
Taxable in
Future
Deductible in
Future Tax Base
Temporary
Difference
(Taxable)
Temporary
Difference
(Deductible)
Assets
Cash 15,500 15,500
Trade receivable 31,800 27,100
Inventory 21,000 21,000 21,000
Prepaid insurance 3,400 3,400 3,400
Development costs 45,000 45,000 45,000
Plant – at cost 105,600 80,720 24,880
Equipment – at cost 33,500 23,000 10,500
Land – at fair value 450,000 250,000
Goodwill 2,000
Other debtors 142,400
Liabilities
Provision for employee
benefits
14,100 14,100 14,100
Provision for warranties 3,100 3,100 3,100
Borrowings 150,000 150,000
Other creditors 12,000 12,000
Temporary Differences for deferred Tax 83,780 17,200
Deferred Tax Asset @ 30% 5,160
Deferred Tax Liability @
30%
25,134
Balances as on 30 June
2018
42,804 10,140
Net Movement (17,670) (4,980)
Answer to Question 1 (4)
In the books of Baby Shark Limited
Journal Entries
Date Particulars Debit ($) Credit ($)
30 June 2019 Deferred Tax Liabilities 17,670
Deferred Tax Assets 4,980
Income Tax Expenses 12,690
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Company Accounting 2019
(Being Deferred Tax Entry done in books)
Answer to Question No.2 (Part A) (1)
Computation of Net Identifiable Assets on Fair Valuation
Particulars Carrying
Amount
Fair
Valuation Variation
Assets
Trade receivables 46,800 46,800 -
Inventory 23,200 28,000 4,800
Plant 101,800 112,000 10,200
Land 20,800 35,800 15,000
Brand Value - 10,000 10,000
Total assets 192,600 232,600 40,000
Liabilities
Trade payables 24,800 24,800 -
Provisions 24,000 24,000 -
Loans 17,200 17,200 -
Interest on Loan - 22,800 22,800
Annual Leave not recognised - 13,000 13,000
Total liabilities 66,000 1,01,800 35,800
Net Identifiable Assets acquired = $232,600 - $ 101,800 = $1,30,800
Sl.
No.
Computation of Purchase Consideration to acquire all the assets of Smuckos Ltd
Particulars Amount ($)
a. Shares issued to A Ordinary Shares of Scruffy Ltd 86,400
(60,000/3*2*$2.16)
b. Artworks to the owners of the B ordinary shares held in Smuckos Ltd. 58,000
c. Cash Paid to pay off the following liabilities in Books:
Trade payables 24,800
Loans 17,200
Interest on Loan 22,800
Liquidation Costs 4,000
Annual Leave not recognised 13,000
Total Purchase Consideration 226,200
Goodwill = Total Purchase Consideration – Net Identifiable Assets acquired
= $ 226,200 - $ 130,800
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Company Accounting 2019
= $ 95,400
Answer to Question No.2 (Part A) (2)
In the books of Scruffy Limited
Journal Entries
Date Particulars Debit ($) Credit ($)
01 Dec 2019 Business Combination 226,200
Vendors of smuckos Ltd 226,200
(Being Purchase Consideration due entry)
01 Dec 2019 Trade receivables 46,800
Inventory 28,000
Plant 112,000
Land 35,800
Brand Value 10,000
Goodwill 95,400
Trade payables 24,800
Provisions 24,000
Loans 17,200
Interest on Loan 22,800
Annual Leave not recognised 13,000
Business Combination 226,200
(Being Assets and Liabilities taken over recorded in
books)
01 Dec 2019 Vendors of smuckos Ltd 226,200
Equity Share Capital 40,000
Share Premium Account 46,400
Artwork 58,000
Cash 81,800
(Being Purchase consideration paid)
01 Dec 2019 Legal and Accounting Cost 800
Share issue expenses 400
Cash 1,200
(Being Legal and Accounting cost and share issue
expenses incurred)
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Company Accounting 2019
Answer to Question No.2 (Part B)
Business Combination
A business combination is essentially an event or transaction where an
acquirer acquires control of either one or over one business. Further, a
business can be defined as a set of integrated assets and activities, which
are capable of being managed and conducted with an intention of offering a
return to the investing members or other participants, owners and members.
Generally, business combinations refer to transactions in which one company
gains control, or at least controlling interest, in another company. A business
combination can be aptly defined as amalgamation of the assets of two or
more business entities for their consolidation as a single entity under single
ownership. A business combination can be managed easily through the way
of a voluntary acquisition, a merger, or a hostile takeover. A business
combination is not a part or creation of new joint venture neither it involves
acquiring an asset which do not form part of business. (AccountingTools.com,
2019)
Three important aspects of business definition are that a business consists of
inputs and processes applied to those inputs that have the ability to create
outputs. Only Purchasing of some asset or liabilities does not amount to
business combination.
Different forms of business combination that might take are
(I) Vertical combination
(II) Horizontal combination
(III) Circular combination
(IV) Diagonal combination
A combination of different business who is involved in the manufacturing and
distribution of different product. (Merriam-Webster, 2019)
A combination of business who are engaged in the manufacturing of same
type of products. For example, Holcim group and Lafarge Cement.
When the firm is involved in manufacturing different types of product
together it is known to be mixed or circular combination. (Sai, 2019)
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Company Accounting 2019
A diagonal business combination means the combination in which two or
more entity performing the said services under the one management.
Answer to Question No.3 (1)
All amount in $
Computation of Surplus on Fair Valuation
Particulars Carrying
Amount
Fair
Valuation
Surplus/
(Deficit)
Plant (cost $300,000) 186,000 190,000 4,000
Trademark 100,000 110,000 10,000
Inventory 70,000 80,000 10,000
Equipment (cost $80,000) 50,000 53,000 3,000
Land 50,000 70,000 20,000
Machinery (cost $18,000) 15,000 16,000 1,000
Fittings (cost $15,000) 10,000 10,000 -
Goodwill 25,000 (25,000)
Guaranteed Payable (“d”) - 10,000 (10,000)
Total Fair Valuation Surplus/(Deficit) 13,000
Computation of Fair Vale of Net Identifiable assets acquired
Particulars Amount ($)
Share capital 200,000
General reserve 25,000
Retained earnings 45,000
Fair Valuation Surplus 13,000
Dividend Payable (Since acquired on cum-div) 10,000
Total 293,000
Goodwill = Cost of Investment in shares of Fish Limited – Fair Value of Net Identifiable assets
= $ 320,000 - $293,000
= $ 27,000
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Company Accounting 2019
Answer to Question No.3 (2) & (3)
In the books of Cat Limited
Journal Entries
Journal
Ref.
Date Particulars Debit ($) Credit ($)
01 Jul 2017 Equity Share Capital 200,000
General Reserve 25,000
Retained Earnings 45,000
Dividend Payable 10,000
Goodwill on Acquisition 27,000
Business Combination Valuation Reserve
(BCVR)
13,000
Investment in Fish Limited 320,000
(Being Investment and equity share knock
off entry on consolidation and recording of
Goodwill and BCVR)
(a) 30 Jun 2019 Retained Earnings 38,000
Depreciation Expenses – Plant 38,000
Accumulated Depreciation - Plant 76,000
(Being Depreciation on plant for 5-year life
at acquisition date and was expected to be
used on a straight-line basis over that
time)
Deferred Tax Asset 22,800
Retained Earnings 11,400
Tax Expenses 11,400
(Being Tax effect of above entry)
(c) 30 Jun 2019 Retained Earnings 4,000
Depreciation Expenses – Machinary 3,000
Accumulated Depreciation - Machinary 7,000
(Being Depreciation on plant for 4-year life
at acquisition date, was sold on 1 January
2019)
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Company Accounting 2019
In the books of Cat Limited
Journal Entries
Journal
Ref.
Date Particulars Debit ($) Credit ($)
Deferred Tax Asset 2,100
Retained Earnings 1,200
Tax Expenses 900
(Being Tax effect of above entry)
(d) 30 Jun 2019 Retained Earnings 4,000
Guaranteed Payables 4,000
(Being the balance of this liability was still
considered to be $4,000 at 30 June 2019)
(e) 30 Jun 2019 Retained Earnings 11,700
Patents 9,000
Deferred Tax Liability 2,700
(Being recording of impairment on Patent
and tax impact theron)
30 Jun 2019 Cash 17,000
Retained Earnings 17,000
(Being Sale of patent on 1 January 2019,
for $17,000)
(g) 30 Jun 2019 Retained Earning 3,500
Deferred Tax Assets 1,500
Goodwill 5,000
(Being Goodwill was written down by
$5,000 at 30 June 2018 by Cat Ltd as a
result of an annual impairment test and
tax effect on the same)
Additional
(a) 30 Jun 2019 Retained Earning 5,000
Interim Dividend 5,000
(Being the interim dividend of $5,000 was
paid by Fish Ltd in the current year)
(b) No Entry required
(c) 30 Jun 2019 Plant 10,000
Deferred Tax Asset 1,500
Retained Earning 3,500
Inventory 15,000
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Company Accounting 2019
In the books of Cat Limited
Journal Entries
Journal
Ref.
Date Particulars Debit ($) Credit ($)
(Being elimination of plant transferred and
lying unsold with tax effect on the same)
(d) 30 Jun 2019 Sales 9,000
Cost of Sales 9,000
(Being elimination of intra group sales)
(d) 30 Jun 2019 Retained Earning 210
Deferred Tax Asset 90
Inventory 300
(Being elimination of unrealized profit on
unsold inventory transferred)
(e) 30 Jun 2019 Sales Revenue 18,000
Cost of Sales 14,000
Inventories 4,000
(Being Intra group sales elimination)
Deferred Tax Assets 1,200
Retained Earnings 1,200
(Being Tax effect on above entries)
(f) 30 Jun 2019 Retained Earning 1000
Furniture 1000
(Being Profit on sale of furniture to be
eliminated)
Depreciation Expenses – Furniture 1000
Accumulated Depreciation – Furniture 1000
Current Tax Liability 300
Tax Expenses 300
(Being depreciation on furniture recorded
and tax effect on same)
(g) 30 Jun 2019 Gain on Sale of Land 25,000
Deferred Tax Assets 7,500
Land 25,000
Retained Earning 7,500
(Being eliminate profit on sale of land and
tax impact theron)
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Company Accounting 2019
In the books of Cat Limited
Journal Entries
Journal
Ref.
Date Particulars Debit ($) Credit ($)
Loan to Fish Limited 12,000
Loan from Cat Limited 12,000
(Being inter company loan elimination)
(h) 30 Jun 2019 Sales Revenue 12,000
Cost of Sales 9,000
Plant 3,000
(Being elimination of intercompany sale of
plant)
Depreciation expenses – Plant 450
Accumulated depreciation – Plant 450
(Being depreciation on plant provided)
Current Tax Liability 1,035
Income tax expenses 1,035
(Being tax effect on above entries)
(i) 30 Jun 2019 Gain on sales of motor vehicle 10,000
Motor vehicle 10,000
(Being elimination of intra group profit on
sale of motor vehicle)
Retained Earning 1000
Depreciation – Motor Vehicle 2000
Accumulated Depreciation – Motor
Vehicle
3000
(Being depreciation provided on Motor
Vehicle transferred)
Deferred Tax Assets 300
Current Tax Liability 600
Tax Expenses 600
Retained Earning 300
(Being tax effect on above entries)
30 Jun 2019 Dividend Payable 4,000
Final dividend 4,000
(Being elimination of final dividend of Fish
Ltd.)
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Company Accounting 2019
Answer to Question No.3 (4)
Consolidation worksheet for the preparation of the consolidated financial statements
as at 30 June 2019
Consolidation
effect
Consolidated
Amount
Particulars Cat Ltd. Fish Ltd. Debit
($)
Credit
($)
Debit
($)
Credit
($)
Debit balances
Cash 9,800 43,000 17,000 69,800
Shares in Fish Ltd 320,000 — 320,000 0
Trade receivables 6,000 5,000 11,000
Inventory 23,000 20,000 10,000 19,300 33,700
Deferred tax assets 10,200 20,000 24,690 54,890
Motor vehicle 10,000 20,000 10,000 20,000
Fittings — 15,000 15,000
Machinery 15,000 15,000 11,000 41,000
Plant 203,000 324,000 14,000 29,000 512,000
Equipment 53,000 80,000 3000 136,000
Land 25,000 50,000 20,000 25,000 70,000
Furniture 7,000 8,000 1000 14,000
Trademark — 100,000 10,000 110,000
Goodwill — 25,000 27,000 30,000 22,000
Cost of sales 162,000 128,000 32,000 258,000
Other expenses 53,000 31,000 84,000
Income tax expense 20,000 18,000 14,235 23,765
Interim dividend paid 12,000 5,000 5000 12,000
Final dividend declared 6,000 4,000 4000 6,000
Loan to Fish Ltd 12,000 — 12,000 0
$947,000 $911,000 1493155
Credit balances
Share capital $312,000 $200,000 200,000 312,000
General reserve 20,000 25,000 25,000 20,000
Business Combination
Valuation reserve
0 0 13,000 13,000
0
Asset revaluation surplus — 5,000 5,000
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Company Accounting 2019
Consolidation worksheet for the preparation of the consolidated financial statements
as at 30 June 2019
Consolidation
effect
Consolidated
Amount
Particulars Cat Ltd. Fish Ltd. Debit
($)
Credit
($)
Debit
($)
Credit
($)
Retained earnings
(1/7/18)
30,000 45,000 115,300 44,490
4,190
Final dividend payable 6,000 4,000 14,000 (4,000)
Current tax liabilities 8,000 2,500 14,235 (3,735)
Provisions 50,000 108,500 158,500
Deferred tax liabilities 20,000 11,000 10,500 16,800 37,300
Loan from Cat Ltd — 12,000 12,000 0
Guranteed Payables - - 2,000 2,000
Sales 220,000 182,000 39,000 363,000
Other income 84,000 30,000 114,000
Gains/(losses) on sale of
non-current assets
50,000 80,000 85,550
44,450
Accumulated
depreciation – plant
114,000 138,000 76,450
328,450
Accumulated
depreciation –
Machinery
1,000 3,000 7,000
11,000
Accumulated
depreciation – furniture
1,000 2,000 1,000
4,000
Accumulated
depreciation – fittings
— 7,000
7,000
Accumulated
depreciation –
equipment
30,000 50,000
80,000
Accumulated
depreciation – vehicles
1,000 6,000 3,000
10,000
1,493,155
Answer to Question No.3 (5) (a)
In the books of Cat Limited
Consolidated statement of profit or loss and
other comprehensive income as at 30 June 2019
Particulars Amount ($)
Sales 363,000
Other income 114,000
Total Revenue 477000
Cost of Sales 258,000
Gross Profit 219,000
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Company Accounting 2019
Other Expenses 84,000
Gains/(losses) on sale of non-
current assets
44,450
Profit Before Tax 179,450
Tax Expenses 23,765
Profit After Tax 155,685
Answer to Question No.3 (5) (b)
In the books of Cat Limited
Consolidated statement of financial position as at 30 June 2019
Particulars Amount ($) Amount ($)
Non-current Assets
Goodwill 22,000
Trademark 110,000
Land 70,000
Plant 512,000
Less: Accumulated depreciation –
plant
328,450 183,550
Machinery 41,000
Less: Accumulated depreciation –
Machinery
11,000 30,000
Equipment 136,000
Less: Accumulated depreciation –
equipment
80,000 56,000
Motor vehicle 20,000
Less: Accumulated depreciation –
vehicles
10,000 10,000
Fittings 15,000
Less: Accumulated depreciation –
fittings
7,000 8,000
Furniture 14,000
Less: Accumulated depreciation –
furniture
4,000 10,000
Deferred tax assets 54,890
Current Assets
Cash 69,800
Trade receivables 11,000
Inventory 33,700
TOTAL ASSETS 668,940
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Company Accounting 2019
Equity 312,000
Other reserves 166,875
Deferred Tax Liabilities 37,300
Current Liabilities
Provisions 158,500
Guranteed Payables 2,000
Final dividend payable (4,000)
Current tax liabilities (3,735)
TOTAL LIABILITIES 668,940
Answer to Question No.3 (5) (c)
In the books of Cat Limited
Consolidated statement of changes in equity
Particulars Equity
Share
General
Reserve
Asset
Revaluation
Reserve
Retained
Earning
Other
Equity
Total
Opening Balance 312,000 20,000 5,000 4,190 29,190
Add: Profit of current year 155,685 155,685
Less: Interim Dividend 12,000 12,000
Less: Final Dividend 6,000 6,000
Closing Balance 312,000 20,000 5,000 141,875 166,875
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Company Accounting 2019
Answer to Question No.4 (1)
Answer to Question No.1
A. Full Goodwill Method
As at 1 July 2013
Fair value of identifiable assets and liabilities of Low Ltd
Fair Value of NCI (25%) $ 77,100
Fair Value of Low Ltd (100%) $ 3,08,400
Fair Value of Net Identifiable Assets and Liabilities:
Share Capital $ 1,00,000
General Reserve $ 60,000
Retained Earning $ 40,000
Inventory (Net of Defered Tax) $ 17,500
Plant (Net of Defered Tax) $ 28,000
Land (Net of Defered Tax) $ 28,000
$ 2,73,500
Goodwill $ 34,900
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Company Accounting 2019
Answer to Question No.4 (2)
Answer to Question No.2
B. Partial Goodwill Method
As at 1 July 2013
Fair value of identifiable assets and liabilities of
Low Ltd
Share Capital $ 1,00,000
General Reserve $ 60,000
Retained Earning $ 40,000
Inventory (Net of Defered Tax) $ 17,500
(BCVR -
Invetories)
Plant (Net of Defered Tax) $ 28,000 (BCVR - Plant)
Land (Net of Defered Tax) $ 28,000 (BCVR - Land)
$ 2,73,500
(a) Consideration Transferred $ 2,60,000 (For 75% Stake)
(b) NCI in Low Ltd $ 54,700
Aggregate of (a) and (b) $ 3,14,700
Goodwill $ 41,200
Answer to Question No.4 (3)
Answer to Question No.3
Particulars Amount Amount
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Company Accounting 2019
Inventories Dr. $ 25,000
Deferred Tax Liabilities Cr. $ 7,500
Business Combination Valuation
Reserve Cr. $ 17,500
(Being Inventories recorded at fair
value)
Accumulated Depreciation A/c Dr.
$
20,000
Plant Cr.
$
20,000
Plant Dr.
$
40,000
Deferred Tax Liabilities Cr.
$
12,000
Business Combination Valuation
Reserve Cr.
$
28,000
(Being Plant recorded at fair value)
Goodwill Dr.
$
41,200
Business Combination Valuation
Reserve Cr.
$
41,200 $ 86,700
Retained Earnings Dr.
$
40,000
Share Capital Dr.
$
1,00,000
General Reserve Dr.
$
60,000
Business Combination Valuation
Reserve Dr.
$
60,000
Shares in Low Ltd.
$
2,60,000
Answer to Question No.4 (4)
(1) Business combination valuation entries
The BCVR entries are affected by the following events that took place during the period from
acquisition
- the depreciation of the plant during the current period
- the sale of the inventories during the current period
For the other asset not affected by the above events, the BCVR entries at 30 June 2017 will be the
same as those at acquisition date, 1 July 2016.
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Company Accounting 2019
Depreciation Dr. $ 4,000
Accumulated Depreciation Cr. $ 4,000
Deferred Tax Liability Dr. $ 1,200
Income Tax Expenses Cr. $ 1,200
(Being Depreciation on Fair Valuation part of Plant)
Cost of Sales Dr. $ 25,000
Income Tax Expenses $ 7,500
Transfer from Business Combination Reserve $ 17,500
Answer to Question No.4 (5)
Answer to Question No.5
(a) Business combination valuation entries at 30 June 2019
Goodwill Dr. $ 41,200
Business Combination valuation reserve Cr.
$
41,200
(b) Pre-acquisition entries at 30 June 2019
Retained Earnings Dr. $ 40,000
Share Capital Dr. $ 1,00,000
General Reserve Dr. $ 60,000
Business Combination Valuation Reserve Dr. $ 60,000
Shares in Low Ltd.
$
2,60,000
(c) NCI share of equity at 1 July 2013
Retained Earnings Dr. $ 10,000
Share Capital Dr. $ 25,000
General Reserve Dr. $ 15,000
Business Combination Valuation Reserve Dr. $ 15,000
NCI Cr.
$
65,000
(d) NCI share of equity changes from 1 July 2013 to 30 June 2018
Retained Earnings Dr. $ 3,750
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Company Accounting 2019
General Reserve Dr. $ 5,000
NCI Cr.
$
8,750
(e) NCI share of equity changes from 1 July 2018 to 30 June 2019
Sales Revenue
$
89,000
Cost of sales
$
32,000
Other expenses
$
8,000
Income tax expense
$
16,000
$
33,000
Depreciation on Plant
$
4,000
Profit on Unsold Inventory
$
1,000
$
28,000
Share of NCI (25%)
$
7,000
(f) Intragroup transaction adjustments required as at 30 June
2019
Sales Dr. $ 2,800
Cost of Sales Cr.
$
1,800
Inventories Cr.
$
1,000
Sl
NO Particulars
High
Limited
Low
Limited Dr Cr Combined
1 Sales 510600 89000
$
2,800
$
5,96,800
2 Cost of Sales 225000 32000
$
25,000
$
1,800
$
2,80,200
3 Other Expense 65000 8000
$
4,000
$
77,000
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Company Accounting 2019
4 Profit 220600 49000 239600
5 Tax 50000 16000 8700 57300
6 Profit 170600 33000 182300
7
Retained Earnings (01-07-
2018) 120000 75000 195000
8 BCVR
$
60,000 126950
$
(66,950)
9 Transfer from BVCR 17500 -17500
1 Current Asset 162000 74000 1000 235000
2 Investment 260000 260000 0
3 Plant 4,25,500 1,90,000 40000 20000 6,35,500
4 Land 1,10,000 60,000 40000 2,10,000
5 Share capital 4,00,000 1,00,000 4,00,000
6 General reserve 60,000 80,000 60,000
7 Trade payables 82,900 12,000 94,900
8 Accumulated depreciation -
plant 1,24,000 24,000 20000 24000 1,52,000
Consolidate
d Profit and
Loss A/c
Sl NO Particulars Amount
1 Revenue 5,96,800
2 Expenses
2 Cost of Sales 2,80,200
3 Other Expense 77,000
4 Profit from Trading 2,39,600
5 Tax 57,300
6 Net Profit 182300
7 Other Comprehensive Income
Land 40000
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Company Accounting 2019
Consolidated Balance Sheet
Sl NO Particulars Amount
Asset
1 Current Asset 235000
2 Plant 6,35,500
3 Land 2,10,000
4 Goodwill 41,200
4 Total 1080500
5 Share Capital 400000
6 General Reserve 60000
7 Retained Earnings 2,92,850
8 Trade Payables 94,900
9 Accumulated Depreciation 1,52,000
10 NCI
$
80,750
11 Total
$
10,80,500
Consolidated Statement of Changes in Equity
Sl NO Particulars Amount
1 Opening Balance 400000
2 Retained Earning 2,92,850
3 General Reserve 60000
4 Closing Balance 7,52,850
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Company Accounting 2019
Bibliography
AccountingTools.com, 2019. Business Combination. [Online]
Available at: https://www.accountingtools.com/articles/2017/5/10/business-combination
Merriam-Webster, 2019. vertical combination. [Online]
Available at: https://www.merriam-webster.com/dictionary/vertical%20combination
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Available at: http://www.yourarticlelibrary.com/business/forms-of-business/business-combination-
concept-causes-and-forms/6942
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