Consolidation Journal Entries for Ghostbusters Ltd at 30 June 2020

This document contains consolidation journal entries for Ghostbusters Ltd at 30 June 2020. It includes gain (loss) on sale of non-current assets, income tax expense, transfer from BCVR, fair valuation of trademark, plant and equipment, depreciation expense, goodwill, interim dividend paid, elimination of profit, tax impact, and loan transaction recorded. The document also includes working notes and financial statements of Ghostbusters Ltd and Bat Ltd.

Solution-1
Consolidation journal / worksheet entries for Ghostbusters Ltd for 30/6/2020
Business combination valuation entries at 30 June 2020
Description Debit Credit
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)
Goodwill
To BCVR
(To record goodwill)
$28,500 $28,500
Pre-acquisition entry
Description Debit Credit
Share capital $ 200,000

General reserve $ 25,000
Retained earnings (1/7/19) ($45,000+$7000) $ 52,000
BCVR $ 53,000
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)
Other entries
Sr.
No. Description Debit Credit
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)
Dividend revenue $ 4,000
To Dividend receivable $ 4,000
(To eliminate the dividend revenue and receivable)
5 Retained earnings (1/7/19) $ 2,800
Income tax expense $ 1,200
To Cost of sales $ 4,000
(Being elimination of profit from opening inventory recorded)
6 Gain (loss) on sale of non-current assets $ 5,000
To Inventory $ 5,000
(Being intercompany transfer of plant treated as inventory
recorded)
Deferred tax asset $ 1,500
To Income tax expense $ 1,500
(Being tax impact on above recorded)
7 Sales $ 8,000
To Cost of sales $ 7,000

To Inventory $ 1,000
(Being elimination of profit in ending inventory recorded)
Deferred tax asset $ 300
To Income tax expense $ 300
(Being tax impact on above recorded)
8 Sales $ 18,000
To Cost of sales $ 16,000
To Inventory $ 2,000
(Being elimination of intercompany sale of inventory recorded)
Deferred tax asset $ 600
To Income tax expense $ 600
(Being tax impact on above recorded)
9 Retained earnings (1/7/19) $ 700
Deferred tax asset $ 300
To Furniture $ 1,000
(Being elimination of profit in sale of furniture recorded)
10 Accumulated depreciation - furniture $ 150
To Depreciation expense $ 100
To Retained earnings (1/7/19) $ 50
(Being depreciation on above profit elimination recorded)
Income tax expense $ 30
Retained earnings (1/7/19) $ 15
To Deferred tax asset $ 45
(Being tax impact of above transaction recorded)
11 Land $ 5,000
To Gain (loss) on sale of non-current assets $ 5,000
(Being elimination of profit from intercompany sale of land
recorded)
Income tax expense $ 1,500
To Deferred tax liability $ 1,500
(Being tax impact of above transaction recorded)
Loan from Ghost Ltd $ 12,000
To Loan to Bat Ltd $ 12,000
(Being elimination of intercompany loan transaction recorded)
Working Note
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
Less: Goodwill already recorded $ (25,000)
Net fair value of identifiable assets and liabilities $ 276,500
Consideration paid to acquire $ 305,000
Goodwill to be recorded $ 28,500
Ghostbusters Ltd.
Financial Statements
Ghostbu
sters Ltd Bat Ltd Ref.
No.
Adjustments Ref.
No.
Group
Dr Cr
Sales revenue 220,000 182,000 7 8,000 376,000
8 18,000
Other income 62,000 20,000 3 5,000 73,000
4 4,000
282,000 202,000 449,000
Cost of sales 162,000 128,000
4,000 5
263,0007,000 7
16,000 8
Other expenses 53,000 41,000
1 800 100 10
94,8251 125
1
215,000 169,000 357,825
Trading profit 67,000 33,000 81,175
Gains/losses on sale
of noncurrent assets 22,000 25,000
1 20,000 5,000 11
26,3751 625
6 5,000
Profit before tax 89,000 58,000 117,550
Tax expense 20,000 18,000
5 1,200 6,000 1
31,865
10 30 240 1
11 1,500 225 1
1,500 6
300 7
600 8
Profit 69,000 40,000 85,685
Retained earnings
(1/7/19) 30,000 45,000 1 800 240 1 18,800
1 175 50 10

2 52,000
5 2,800
9 700
10 15
Transfer from BCV
reserve - - 2 14,700 14,000 1 -
700 1
99,000 85,000 104,485
Dividend paid 12,000 10,000 5,000 2 12,000
5,000 3
Dividend declared 6,000 4,000 4,000 4 6,000
18,000 14,000 18,000
Retained earnings
(30/6/20) 81,000 71,000 86,485
Share capital 312,000 200,000 2 200,000 312,000
General reserve 20,000 25,000 2 25,000 20,000
BCVR - - 2 9,800 7,000 1 -
2,800 1
Total Equity 413,000 296,000 418,485
Deferred tax liabilities - -
1 480 3,000 1
5,2201,200 1
1,500 11
Dividend payable 6,000 4,000 4 4,000 6,000
Current tax liability 8,000 2,500 10,500
Loan from Ghost Ltd - 12,000 11 12,000
Provisions 78,000 169,500 247,500
Total Liabilities 92,000 188,000 269,220
Total Liabilities +
Equity 505,000 484,000 687,705
Assets
Shares in Bat Ltd 325,000 325,000 2
Cash 7,800 35,000 42,800
Inventory 20,000 50,000
5,000 6
62,0001,000 7
2,000 8
Receivables 6,000 20,000 4,000 4 22,000
Land 25,000 50,000 11 5,000 80,000
Plant & equipment 113,000 300,000 110,000 1 303,000
Accumulated
depreciation – P & E
-
34,000
-
114,000 1 114,000 1,600 1 -
35,600
Machinery 15,000 15,000 30,000
Accumulated
depreciation – Mach.
-
1,000 - 3,000 -
4,000
Furniture 7,000 8,000 1,000 9 14,000
Accumulated
depreciation – Furn.
-
1,000 - 2,000 10 150 -
2,850
Trademark 100,000 1 10,000 110,000
Goodwill 25,000 2 28,500 53,500
Deferred tax assets 10,200 6 1,500 45 10 12,855
7 300

8 600
9 300
Loan to Bat Ltd 12,000 12,000 11
Total assets 505,000 484,000 687,705