Computation of Acquisition Analysis and Consolidation Worksheet Entries

This document provides a step-by-step guide on how to compute acquisition analysis and consolidation worksheet entries for a group of companies. It includes examples and explanations for each step, making it easy to understand and apply. The document covers topics such as share capital, general reserve, retained earnings, goodwill, and more. It is suitable for students studying finance, accounting, or business management.

Solution-1
Part-1
Computation of acquisition analysis as on 1 July, 2017
Share Capital $65,000
General reserve $25,000
Retained Earnings $20,250
Add: Fair valuation - Plant $3,500
Add: Fair valuation - Land $7,000
Add: Fair valuation - Inventories $2,800
Add: Fair valuation - Brand value $4,200
Less: Fair valuation - Contingent liability -$5,250
Less: Recorded Goodwill -$2,500 $9,750
Net fair value of assets acquired $120,000
Consideration transferred to acquire Smart Ltd. $123,000
Goodwill $3,000
Less: Goodwill already recorded -$2,500
Unrecorded goodwill $500

Part-2
Consolidation worksheet entries for Positive Ltd’s group at 30 June 2019
Particulars Dr. Cr.
Share Capital $65,000
General reserve $17,500
Retained Earnings (1/7/18) (20,250+7,000+2,800+7,500) $37,550
Business combination valuation reserve $2,950
Shares in Smart Ltd. $123,000
(Pre-acquisition entry recorded)
Brands $6,000
Business combination valuation reserve $4,200
Deferred tax liabilities $1,800
(Fair valuation of brands recorded)
Transfer from business combination valuation reserve $5,250
Income tax expense $2,250
Damages expenses $7,500
(Settlement of liability recorded)
Retained Earnings (1/7/18) $700
Depreciation expense $500
Gains (losses) on sale of non-current assets $3,500
Income tax expense $1,200
Transfer from business combination valuation reserve $3,500
(Sale of plant recorded)
Accumulated impairment loss $6,500
Goodwill $6,000
Business combination valuation reserve $500
(Impairment of goodwill recorded)
Transfer from business combination valuation reserve $3,500
Business combination valuation reserve $3,500
(Amount transferred for sale of plant)
Business combination valuation reserve $5,250
Transfer from business combination valuation reserve $5,250
(Amount transferred for settlement of contingent liability)
Transfer from General reserve $7,500

General reserve $7,500
(Amount transferred from general reserve)

Part-3
Consolidation worksheet for Positive Ltd’s group at 30 June 2019
Income Statement / Balance
Sheet
Positive
Ltd
Smart
Ltd Total Adjustment entries Group
Dr. Cr.
Revenue $45,000 $32,000 $77,000 $77,000
Expenses $17,000 $21,000 $38,000 $500 $7,500 $31,000
Trading profit $28,000 $11,000 $39,000 $46,000
Gains (losses) on sale of non-
current assets $4,000 $4,000 $8,000 $3,500 $4,500
Profit before tax $32,000 $15,000 $47,000 $50,500
Income tax expense $6,000 $2,500 $8,500 $2,250 $1,200 $9,550
Profit for the period $26,000 $12,500 $38,500 $40,950
Retained earnings 1 July 2018 $51,500 $27,500 $79,000 $38,250 $40,750
Transfer from BCVR $0 $8,750 $8,750 $0
Transfer from general reserve $15,000 $7,500 $22,500 $7,500 $15,000
$92,500 $47,500 $140,000 $96,700
Dividend paid $10,000 $0 $10,000 $10,000
Retained earnings 30 June 2019 $82,500 $47,500 $130,000 $86,700
Share capital $75,000 $65,000 $140,000 $65,000 $75,000
General reserve $5,000 $10,000 $15,000 $17,500 $7,500 $5,000
Business combination valuation
reserve $0 $8,200 $8,200 $0
Other components of equity
(30/6/19) $12,500 $9,000 $21,500 $21,500
Total equity $175,000 $131,500 $306,500 $188,200
Accounts payable $20,000 $5,000 $25,000 $25,000
Deferred tax liability $9,000 $5,000 $14,000 $1,800 $15,800
Other non-current liabilities $125,000 $115,000 $240,000 $240,000
Total liabilities $154,000 $125,000 $279,000 $280,800
Total equity and liabilities $329,000 $256,500 $585,500 $469,000
Plant $157,000 $233,000 $390,000 $390,000
Accumulated depreciation - plant -$91,000 -$110,000
-
$201,000
-
$201,000
Land $10,000 $10,000 $20,000 $20,000
Brands $40,000 $0 $40,000 $6,000 $46,000
Shares in Smart Ltd $123,000 $0 $123,000 $123,000 $0
Financial assets $55,000 $103,500 $158,500 $158,500
Cash $5,000 $2,500 $7,500 $7,500

Inventories $20,000 $15,000 $35,000 $35,000
Goodwill $10,000 $9,000 $19,000 $6,000 $13,000
Accumulated impairment losses $0 -$6,500 -$6,500 $6,500 $0
Total assets $329,000 $256,500 $585,500 $469,000

Solution-2
Part-1
Computation of acquisition analysis
Share Capital $150,000
General reserve $20,000
Retained Earnings $10,000
Net fair value of assets acquired $180,000
Consideration transferred to acquire Sing Song Ltd. $200,000
Goodwill $20,000

Part-2
Consolidation worksheet entries for Ping Pong Ltd’s group at 30 June 2019
Particulars Dr. Cr.
Share Capital $150,000
General reserve $20,000
Retained Earnings (1/7/18) $10,000
Goodwill $20,000
Shares in Sing Song Ltd. $200,000
(Pre-acquisition entry recorded)
Accumulated impairment loss $20,000
Goodwill $20,000
(Impairment of goodwill recorded)
Management fee revenue $7,000
Management fee expense $7,000
(Inter-company transaction of management fee eliminated)
Accounts payable $10,000
Accounts receivable $10,000
(Inter-company transaction of sale of inventory eliminated)
12% unsecured notes $25,000
Interest revenue $3,000
Unsecured notes $25,000
Interest expense $3,000
(Inter-company transaction of notes eliminated)
Dividend revenue $5,000
Dividend payable $3,000
Interim dividend paid $2,000
Dividend receivable $3,000
Final dividend proposed $3,000
(Inter-company transaction of dividend paid eliminated)