Detailed Acquisition Analysis: ACCT20073 Term 2 2019 Assignment Part B

This assignment presents a comprehensive acquisition analysis, focusing on the acquisition of Y's Ltd. It begins with the calculation of the net fair value of identifiable assets and liabilities, considering adjustments for land, plant, inventory, brands, and liabilities. The solution then calculates unrecorded goodwill. The document includes detailed worksheet entries for business combination valuation, pre-acquisition entries, and adjustments for depreciation, brands, deferred tax liabilities, damages expense, and impairment losses. The solution also incorporates adjustments for retained earnings, share capital, general reserve, and business combination valuation reserve, along with a consolidated worksheet demonstrating the impact on revenues, expenses, and equity components. The final section includes a summarized balance sheet showcasing the consolidated financial position.

Preparation of acquisition analysis at 1
July 2017
Net Fair Value of identifiable Assets
and
Net fair value of identifiable assets and
liabilities of Y’s Ltd =
Equity ($13000+$5000+$4050)
Land Add: $2000 (1-30%)
Plant add: $1000 (1-30%)
Inventory Add: 800 (1-30%)
Brands $1200 (1-30%)
Liabilities 1500 (1-30%)
Goodwill $500
Total = $24,000
Calculation of
Unrecorded Goodwill
Consideration
transferred 24,600
Less Net fair value of
identifiable assets
and liabilities of Y’s
Ltd -24,000
Goodwill acquired 600
Less Goodwill
recorded -500
Unrecorded
goodwill 100
Worksheet entries
at 30 June 2019
Business combination valuation entries
1 Particular De Cre

bit dit
Depreciation Expenses 100
Gain or Loss on sales of non
Currenmt Assets' 700
Retained Earning 140
To Income Tax 240
To Transfer from Business
Combination Reverse 700
(To record deprciation expense
and related tax)
2 Brands
120
0
To Deferred Tax Liabilities 360
To Business Combination Valuation
Reverse 840
(To record brands and related
deferred tax liability)
3
Transfer from Business
Combination Valuation Reserve
105
0
Income Tax Expense 450
To Damages Expense
150
0
(To record damages expense
and related tax expense)
4
Accumulated Impairment
Losses – Goodwill
130
0
To Goodwill
120
0
To Business Combination
Valuation Reserve 100
(To record impairment losses)
Pre-acquisition
entries
At 1st July 2017
1 Particular
De
bit
Cre
dit
Share Capital
130
00
General Reserve
500
0

Retained Earning (1/7)
405
0
Business Combination Valuation
Reserve
255
0
To Share in Y Limited
246
00
To record shares in Y Limited)
At 30th June 2019
Particular
De
bit
Cre
dit
Retained Earnings (1/7 /18)
(Working below)
80
10
Share Capital
13
00
0
General Reserve 30
00
Business Combination Valuation
Reserve
59
0
To Shares in ‘Y’
limited
24
60
0
(To record shares in Y Limited)
Transfer from Business
Combination Valuation Reserve
70
0
To Business
Combination Valuation Reserve
70
0
(To record sale of Plant)
Business Combination Valuation
Reserve
10
50
To Transfer from
Business Combination Valuation
Reserve
10
50
(To record settlement of Court
case)
Transfer from General Reserve 15
00
To General Reserve 15
00

(To record transfer from General
Reserve)
Working
Beginning Balance of
Retained Earnings 4050
Add Transfer from
General Reserve 2000
BCVR – Inventory 560
BCVR - Land 1400
Retained
Earnings (1/7
/18)
8010
Worksheet
X Y Adjust
ments Gr
ou
pLtd Lt
d Dr Cr
Revenues 13000 64
00 1 10
0
193
00
Expenses 7000 42
00
15
00 1 970
0
Trading profit 6000 22
00
960
0
Gains (losses) on
sale of non-current
assets
3000 80
0 1 70
0
310
0
Profit before tax 9000 30
00
127
00
Income tax expense 2000 50
0 1 45
0
24
0 1 271
0
Profit tax 7000
250
0
999
0
Retained earnings
(1/7/18) 33300 55
00
1 14
0 306
50
2 80
10
Transfer from BCVR 0 0
1 10
50
70
0 1
0
2 70 10 2

0 50
Transfer from
General reserve 3000 15
00
15
00
300
0
43300 95
00
436
40
Dividend paid 2000 0 200
0
Retained earnings
(30/6/19) 41300
950
0 0 0 0 0
416
40
Share capital 15000
13
00
0
2
13
00
0
150
00
eneral reserve 1000 20
00 2 30
00
15
00 2 150
0
BCVR 0 0
2 59
0
84
0 1
02 10
50
10
0 1
70
0 2
57300
24
50
0
581
40
Other components of
equity (1/7/18) 3000 15
00
450
0
Increases/Decreases -500 30
0 -200
Other components of
equity (30/6/19) 2500
180
0 0 0 0 0
430
0
Total equity 59800
263
00 0 0 0 0
624
40
Accounts payable 4000 10
00
500
0
Deferred tax liability 1800 10
00
36
0 1 316
0
Other liabilities 24800
23
00
0
478
00
Total Equity and
liabilities 90400
513
00 0 0 360 1
118
400
Goodwill 2000 18
00
12
00 1 260
0
Accumulated
impairment losses 0
-
13
00
1 13
00 0
Inventory 4000 30
00
700
0

Cash 1000 50
0
150
0
Financial assets 11000
10
50
0
215
00
Shares in Y Ltd 24600 0
24
60
0
2 0
Land 15000
20
00
0
350
00
Brands 8000 0 1 12
00
920
0
Plant 43000
38
80
0
818
00
Accumulated
depreciation -18200
-
22
00
0
-
402
00
Total 90400
513
00
327
90
327
90
118
400