Acquisition Analysis and Consolidation Worksheet for Desklib

Solution-1
Acquisition analysis as on 1 July, 2017
Particulars Amount ($)
Share Capital 13,000
General reserve 5,000
Retained Earnings 4,050
Goodwill already recorded (500)
Fair Valuation:
- Plant 700
- Land 1,400
- Inventories 560
- Brands 840
- Liability (1,050)
Net fair value of assets acquired 24,000
Consideration paid 24,600
Goodwill acquired 600
Goodwill already recorded 500
Goodwill to be recorded 100

Solution-2
Pre-acquisition entries and Consolidation worksheet entries as at 30 June 2019
Sr. No. Particulars Debit ($) Credit ($)
Pre Acquisition entry as on 30 June 2019
1 Share Capital 13,000
General reserve 3,000
Retained Earnings (1/7/18) * 8,010
Goodwill 100
Business combination valuation reserve 490
To Shares in ‘Y’ limited 24,600
(To record acquisition of Y Ltd. as on 30 June, 2019)
* The Retained earnings includes the sale of inventory, sale of land &
transfer from general reserve, calculated as 4,050+1400+560+2000
2 Transfer from business combination valuation reserve 700
To Business combination valuation reserve 700
(To record impact of sale of plant in current year on BCVR)
3 Business combination valuation reserve 1,050
To Transfer from business combination valuation reserve 1,050
(To record impact of settlement of court case in current year on
BCVR)
4 Transfer from General reserve 1,500
To General reserve 1,500
(To record transfer from general reserve)
Consolidated worksheet entries
5 Depreciation expense 100
Gain/ loss on sale of plant 700
Retained earnings (1/7/18) 140
To Income tax expense 240
To Transfer from business combination valuation reserve 700
(To record sale of plant, its depreciation and tax impact)
6 Brands 1,200
To Deferred tax liability 360
To Business combination valuation reserve 840
(To record brands in the books)
7 Transfer from Business combination valuation reserve 1,050
Income tax expense 450
To Damages expense 1,500