Consolidation Journal Entries for Ghostbusters Ltd at 30 June 2020

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