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Preparation of Acquisition Analysis

   

Added on  2021-06-17

9 Pages1278 Words87 Views
Solution - 1Preparation of Acquisition analysis (Partial Acquisition) as on 1 July, 2016Particulars Amount ($) Share Capital 160,000 General Reserve 10,000 Retained Earnings 59,000 Fair value: Inventories 2,800 Fair value: Plant 6,300 Fair value: Land 11,900 Fair value of net assets acquired in Sunshine Ltd. 250,000 Ownership percentage80%Equivalent fair value of assets acquired in Sunshine Ltd. 200,000 Consideration transferred for ownership 240,000 Goodwill (excess of consideration paid over fair value of net assets acquired) 40,000 Consolidation Worksheet Entries as at 1 July, 2016ParticularsDr./Cr. Amount ($) Fair valuation of PlantAccumulated DepreciationDr. 130,000 To PlantCr. 121,000

To Deferred tax liabilityCr. 2,700 To Business Combination Valuation ReserveCr. 6,300 Fair valuation of InventoriesInventoriesDr. 4,000 To Deferred tax liabilityCr. 1,200 To Business Combination Valuation ReserveCr. 2,800 (fair valuation of Inventory)Fair valuation of LandLandDr. 17,000 To Deferred tax liabilityCr. 5,100 To Business Combination Valuation ReserveCr. 11,900 (fair valuation of Land)Goodwill on business combinationGoodwillDr. 40,000 To Business Combination Valuation ReserveCr. 40,000 Pre Acquisition entry as on 1 July, 2016Share CapitalDr. 128,000 Retained EarningsDr. 47,200 General ReserveDr. 8,000 Business combination valuation reserve* Dr. 56,800 To Investment in Sunshine Ltd.Cr. 240,000 (acquisition of subsidiary)Non Controlling Interest in equity entry as on 1 July, 2016Share CapitalDr. 32,000 Retained EarningsDr. 11,800 General ReserveDr. 2,000

Business combination valuation reserveDr. 4,200 To Non Controlling InterestCr. 50,000 *(40,000+ 21,000*80%)Consolidation Worksheet Entries as at 30 June, 2018ParticularsDr./Cr. Amount ($) Fair valuation of PlantAccumulated DepreciationDr. 130,000 To PlantCr. 121,000 To Deferred tax liabilityCr. 2,700 To Business Combination Valuation ReserveCr. 6,300 (fair valuation of Plant)Depreciation expense on fair valuation of PlantDepreciation expenseDr. 3,000 Retained earnings (1/7/17)Dr. 3,000 To Accumulated DepreciationCr. 6,000 Income tax liability on above depreciation expenseDeferred tax liabilityDr. 1,800 To Income tax expenseCr. 900 To Retained earnings (1/7/17)Cr. 900 Fair valuation of landLandDr. 17,000 To Deferred tax liabilityCr. 5,100

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