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Acquisition analysis for Tuna Ltd

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Added on  2021-05-31

Acquisition analysis for Tuna Ltd

   Added on 2021-05-31

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Solution-1Acquisition analysis for Tuna Ltd. as on 1 July, 2015Calculation of Fair Value of net assets acquired as on 1 July, 2015Particulars Amount ($) Share Capital66,000Retained Earnings6,000Fair value: - Plant ((123000-120000)*(1-30%))2,100 - Patent ((105000-90000)*(1-30%))10,500 - Inventory ((22500-18000)*(1-30%))3,150Net fair value of assets acquired87,750Consideration paid - In cash30,000 - In shares60,00090,000Goodwill2,250
Acquisition analysis for Tuna Ltd_1
Solution-2Consolidation Journal Entries for Tuna Ltd. as on 30 June, 2017Pre-Acquisition entry as on 1/7/15Share Capital$ 66,000Retained Earnings$ 6,000Goodwill$ 2,250Business Combination Valuation Reserve$ 15,750To Shares in Brim Ltd.$ 90,000Pre-Acquisition entry as on 30/6/17The pre-acquisition entry as on 30/6/17 is affected due to sale of patent and inventory1Share Capital$ 66,000Retained Earnings$ 19,650Goodwill$ 2,250Business Combination Valuation Reserve$ 2,100To Shares in Brim Ltd.$ 90,000Business Combination Valuation Entries2Accumulated Depreciation$ 30,000To Plant$ 27,000To Deferred tax liability$ 900To Business Combination Valuation Reserve$ 2,1003Depreciation (3000/5)$ 600Retained earnings (1/7/16)$ 600
Acquisition analysis for Tuna Ltd_2
To Accumulated Depreciation$ 1,200Deferred tax liability $ 360To Income tax expense$ 180To Retained earnings (1/7/16)$ 180Other consolidation entries4(a)Sales revenue$ 21,000To Cost of sales$ 21,000Retained earnings (1/7/16)$ 420Income tax expense$ 180To Cost of sales$ 6004(b)Sales revenue$ 4,500To Cost of sales$ 4,200To Inventory$ 300Deferred tax asset$ 90To Income tax expense$ 904(c)Proceeds on sale of Plant$ 15,000To Carrying amount of plant sold$ 14,000To Plant$ 1,000Deferred tax asset$ 300
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