Acquisition Analysis Report: Financial Statements and Calculations

This report provides an in-depth analysis of the acquisition of Darren Ltd by Ethan Ltd. It examines the reasons behind the acquisition, the process of consolidation, and the relevant financial calculations. The report includes the consolidated statement of financial position, the net identifiable assets, and the gain on bargain purchase. The analysis also references specific accounting standards, such as AASB 3, AASB 10 and AASB 12. The report provides a comprehensive overview of the acquisition, covering key financial aspects and the implications for both companies. The report also provides a detailed breakdown of the financial position of Ethan Limited and Darren Limited, along with the adjustments required for consolidation. The acquisition was made for $110,000, and the report calculates the gain on bargain purchase. The report also analyzes the impact of the acquisition on the financial statements and the company's overall financial position.

Running Head: ACQUISITION ANALYSIS 1
ACQUISITION ANALYSIS

Running Head: ACQUISITION ANALYSIS
Contents
Consolidation and Acquisition....................................................................................................................3
Reasons for the Acquisition.........................................................................................................................3
Conclusion...................................................................................................................................................5
References...................................................................................................................................................7

Running Head: ACQUISITION ANALYSIS
Consolidation and Acquisition
Acquisition and takeover refers to the term in the section of the mergers, acquisition and
restructuring in finance. Acquisition refers to the purchase of the controlling interest by one
company in the share capital of an existing company (Hoyle, Schaefer and Doupnik, 2015).
This may be done via an agreement with the majority of the interest, purchase of the shares by
private agreement, purchase of shares in the open market and acquisition of share capital in the
open market. These are some kind of the ways by which the merger can happen.
An acquisition is one where one company purchases most of the shares of the company in order
to gain the control of the company. As in case of the Ethan and Darren limited, Ethan limited has
acquired the Darren Limited for the acquisition of $110000 (Jones, 2018).
Reasons for the Acquisition
There are several reasons for which the acquisition takes place and those have been determined
below.
 In order to enter the foreign market, the company has the opportunities via acquiring the
foreign based company locally. This way the growth of the company will be intact and
fast (Thaker, Carvalho and Koedinger, 2019).
 As a reason of the growth strategy, a company can acquire the company to restart the
business in the new manner so that the depletion of the assets that have occurred perhaps
would be curtailed.
 To gain the new technology the company opts for the expansion to become cost efficient
who has already implemented the new technology.

Running Head: ACQUISITION ANALYSIS
Friendly acquisitions occur when the firm consents to be procured well-disposed acquisitions
frequently progress in the direction of the common advantage of the gaining and target
organizations. The two organizations create systems to gain the mutual benefit out of the
acquisition, and they audit the budget reports and different valuations for any commitments that
may accompany the advantages. On the other hand the unfriendly acquisition is also known as
the hostile takeovers (Hoyle, Schaefer and Doupnik, 2015).
In case of the Ethan and Darren Limited, the acquisition value amounts to $110000, and the
Ethan has acquired the gain in case on bargain and purchase amounting to $450. The net
identifiable assets have been calculated below in the following manner (Tang, 2019).
Net fair value of the identifiable
assets and liabilities of Darren Limited
Equity
$
54,000.00
Retained earnings
$
36,000.00
Asset Revaluation Surplus
$
18,000.00
$
108,000.00
Plant
$
1,050.00
Inventory
$
1,400.00
Total
$
110,450.00
Consideration Transferred
$
110,000.00
Gain on bargain and
purchase
$
450.00

Running Head: ACQUISITION ANALYSIS
Conclusion
Since the acquisition is generally the amicable take over and merger, the both firms have the
mutual benefit and where both of the firms are ready to cooperate in order to for the new entity.
However, each acquisition takeover and merger in cases the acquisition to be unique case. The
Ethan limited acquired for the gain of the $450 and the company will benefit from it.

Running Head: ACQUISITION ANALYSIS
ETHAN LIMITED
Consolidated Statement of Financial position
As at 30th June 2015
Current Assets 73900
Inventories
Non-Current Assets
Plant and Machinery 479600
Accumulated
Depreciation -135800 343800
Land 180000
Total Non-Current Assets 523800
Total Assets 597700
Equity
Share capital 360000
Retained Earnings 151280
General Reserve 10000
Asset revaluation
Surplus 20500
Total Equity 541780
Liabilities 55920
Total Equity and Liabilities 597700

Running Head: ACQUISITION ANALYSIS
References
Hoyle, J.B., Schaefer, T. and Doupnik, T., 2015. Advanced accounting. McGraw Hill.
Jones, R.C., 2018. Common Control Entities and Consolidation of Variable Interest Entities. The
CPA Journal, 88(8), pp.50-55.
Tang, C., 2019. Fair Value Accounting and Financial Contagion: An Analysis of Marking
Up. Available at SSRN 3358180.
Thaker, K., Carvalho, P. and Koedinger, K., 2019, March. Comprehension Factor Analysis:
Modeling student's reading behaviour: Accounting for reading practice in predicting students'
learning in MOOCs. In Proceedings of the 9th International Conference on Learning Analytics
& Knowledge(pp. 111-115). ACM.