Computation of Acquisition Analysis and Consolidation Worksheet Entries

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)