Consolidation of Financials for Ghostbusters Ltd: Steps, Entries, and Worksheet

Consolidation of financials is a lengthy process, which involves few steps. The steps and consolidation of
Ghostbusters Ltd. is as below:
Step-1 Preparation of Acquisition Analysis as on 1 July, 2018
Descriptions Amount
Share capital $ 200,000
General reserve $ 25,000
Retained earnings $ 45,000
Fair value:- Plant and equipment ((190000-186000)*(1-30%)) $ 2,800
Fair value:- Trademark ((110000-100000)*(1-30%)) $ 7,000
Fair value:- Inventories ((80000-70000)*(1-30%)) $ 7,000
Fair value:- Land ((70000-50000)*(1-30%)) $ 14,000
Fair value:- Machinery ((16000-15000)*(1-30%)) $ 700 $ 31,500
Fair value of net assets acquired $ 301,500
Less: Goodwill already recorded $ (25,000)
$ 276,500
Cost of Investment $ 305,000
Goodwill to be recorded $ 28,500
Step-2 Business combination valuation entries at 30 June 2020
Description Amount
Gain (loss) on sale of non-current assets $ 20,000
To Income tax expense $ (6,000)
To Transfer from BCVR $ (14,000)
(Being sale of fair valued land recorded)
Trademark $ 10,000
To Deferred tax liability $ (3,000)
To BCVR $ (7,000)
(Being fair valuation of trademark recorded)
Accumulated depreciation - P&E $ 114,000
To Plant and equipment $ (110,000)
To Deferred tax liability $ (1,200)
To BCVR $ (2,800)
(Being fair valuation of Plant recorded)
Depreciation expense - P&E $ 800
Retained earnings (1/7/19) $ 800
To Accumulated depreciation - P&E ($4 000/5) $ (1,600)
(Being depreciation on above plabt fair valuation recorded)
Deferred tax liability $ 480
To Income tax expense $ (240)

To Retained earnings (1/7/19) $ (240)
(Being tax impact on above entry recorded)
Depreciation expense – machinery $ 125
Gain (loss) on sale of non-current assets $ 625
Retained earnings (1/7/19) $ 175
To Income tax expense $ (225)
To Transfer from BCVR $ (700)
(Being sale of fair valued machinery recorded)
Step-3 Pre- acquisition entries at 30 June 2020
Description Amount
Share capital $ 200,000
General reserve $ 25,000
Retained earnings (1/7/19) ($45,000+$7000) $ 52,000
BCVR $ 24,500
Goodwill $ 28,500
To Shares in Bat Ltd $ (330,000)
(Being pre acquisition entry as on 30/6/20 recorded)
Transfer from BCVR $ 14,000
To BCVR $ (14,000)
(Being transfer of amount on sale of land recorded)
Transfer from BCVR $ 700
To BCVR $ (700)
(Being transfer of amount on sale of machinery recorded)
Shares in Bat Ltd $ 5,000
To Interim dividend paid $ (5,000)
(Being interim dividend received)
Step-4 Other consolidation entries at 30 June 2020
Sr. No. Description Amount
3 Dividend revenue $ 5,000
To Interim dividend paid $ (5,000)
(Being interim dividend paid)
4 Dividend payable $ 4,000
To Final dividend declared $ (4,000)
(To eliminate the dividend paid and payable)