Corporate Accounting System

Running head: CORPORATE ACCOUNTING SYSTEM
Corporate accounting system
Name of the student
Name of the university
Student ID
Author note

CORPORATE ACCOUNTING SYSTEM
Contents
Part A:........................................................................................................................................2
Part B:.........................................................................................................................................5
Introduction:...........................................................................................................................5
Identification of challenges:...................................................................................................5
Solutions to overcome the identified possible impediments:.................................................6
Conclusion:............................................................................................................................6
References list:...........................................................................................................................8

CORPORATE ACCOUNTING SYSTEM
Part A:
Acquisition Analysis:
Particulars
Book
Value
Fair
Value
Tax
Rate
Net Fair
Value
Share Capital 260000
Retained Earnings 200000
Plant 100000 120000 30% 14000
Net Fair Value of
Identifiable Assets &
Liabilities (A) 474000
Cost of Investment (B) 620000
Goodwill Acquired
(B-A) 146000
In the books of Super Retail Ltd.
Consolidation Journal Entries
Dr. Cr.
D
at
e Particulars
Amo
unt
Amo
unt
P
ar
t I 1
Business Combination
Valuation Entries:
1.
a Accumulated Depreciation
6000
0
Plant
4000
0
Deferred Tax Liability 6000
Business Combination
Valuation Reserve
1400
0
(Being Plant revalued at fair value during acquisition)
1.
b Goodwill
1460
00
Business Combination
Valuation Reserve
1460
00
(Being goodwill at acquisition recorded)
2
Pre-Acquisition Entries:
Share Capital
2600
00
Retained Earnings
2000
00

CORPORATE ACCOUNTING SYSTEM
Business Combination
Valuation Reserve
1600
00
Investment in New World
Retail Ltd.
6200
00
(Being 100% shares acquired from New World Retail
Ltd. eliminated)
P
ar
t
II 3
Depreciation of Plant:
3.
a Depreciation Expense 2000
Accumulated Depreciation 2000
(Being depreciation on revalued plant recorded)
3.
b Deferred Tax Liability 600
Income Tax Expense 600
(Being deferred tax adjusted for depreciation on
revalued plant)
4
Intragroup Sales &
Closing Inventory:
4.
a Sales Revenue
3000
0
Cost of Sales
2600
0
Inventory 4000
(Being intragroup sales and profit on closing inventory
eliminated)
4.
b Deferred Tax Assets 1200
Income Tax Expense 1200
(Being deferred tax adjusted for adjusted profit on
closing inventory)
P
ar
t
III 5
Depreciation of Plant:
5.
a Depreciation Expense 2000
Accumulated Depreciation 2000
(Being depreciation on revalued plant recorded)
5.
b Deferred Tax Liability 600
Income Tax Expense 600
(Being deferred tax adjusted for depreciation on
revalued plant)
6
Intragroup Sales &
Closing Inventory:
6.
a Sales Revenue
6500
0
Cost of Sales
6500
0