Company Accounting Assignment Solution for ACCT20073, Term 2 2019

This document presents a comprehensive solution to a company accounting assignment. The solution includes a detailed business acquisition analysis, calculating the fair value of identifiable net assets, purchase consideration, gain on acquisition, and goodwill. It also provides consolidation entri...Read More

Running head: COMPANY ACCOUNTING
Company Accounting
Name of the Student:
Name of the University:
Author’s Note:

1COMPANY ACCOUNTING
Table of Contents
Answer to question 1:......................................................................................................................2
Answer to question 2:......................................................................................................................3
Answer to question 3:......................................................................................................................4
Bibliography:...................................................................................................................................5

2COMPANY ACCOUNTING
Answer to question 1:
Business Acquisition Analysis
Ordinary Share Capital 13,000
Free Reserve 5,000
Retained Profit 4,050
Total book value of net assets 22,050
Fair Value Adjustments:
Plant 1,000
Land 2,000
Inventories 800 3,800
Unrecorded Liabilities:
Brand Value 1,200
Unrecorded Liabilities (1,500) (300)
Fair value of identifiable net assets 25,550
Less: Purchase Consideration Transferred 24,600
Gain on Acquisition 950
Goodwill appearing in the balance sheet 500
Net Gain on bargain purchase 450

3COMPANY ACCOUNTING
Answer to question 2:
X Lt.
Consolidation Entries
Explanations Debit Credit
Ordinary Share Capital 13,000
Free Reserve (01/07/2017) 5,000
Retained Profit (01/07/2017) 4,050
Business Combination Valuation Reserve 22,050
Plant 1,000
Land 2,000
Inventories 800
Brand Value 1,200
Unrecorded Liabilities 1,500
Business Combination Valuation Reserve 3,500
Business Combination Valuation Reserve 25,550
Shares in Y Ltd. 24,600
Goodwill 500
Gain on valuation 450
Free Reserve 3,500
Retained Profit (01/07/2017) 3,500
Gain (1600-1500) 100
Unrecorded Liabilities 100

4COMPANY ACCOUNTING

5COMPANY ACCOUNTING
Answer to question 3:
Consolidation Worksheet
Particulars ‘X’
Limited
‘Y’
limited Debit Credit Group
Total
Revenues 13,000 6,400 19,400
Expenses (7,000) (4,200) (11,200)
Trading profit 6,000 2,200 8,200
Gains (losses) on sale of non-
current assets
3,000 800
3,800
Profit before tax 9,000 3,000 12,000
Income tax expense (2,000) (500) (2,500)
Profit for the period 7,000 2,500 9,500
Retained Earnings (1/7/18) 33,300 5,500 6,050 32,750
Transfer from General reserve 3,000 1,500 1,500 3,000
43,300 9,500 45,250
Dividend paid (2,000) - (2,000)
Retained earnings (30/6/19) 41,300 9,500 43,250
Share capital 15,000 13,000 13,000 15,000
General reserve 1,000 2,000 5,000 3,500 1,500
Other component of Equity 2,500 1,800 4,300
Gain 450 450
Total Equity 59,800 26,300 64,500
Accounts payable 4,000 1,000 5,000
Deferred tax liability 1,800 1,000 2,800
Other non-current liabilities 24,800 23,000 47,800
Unrecorded Liabilities 1,600 1,600
Total liabilities 30,600 25,000 55,600
Total of Equities and
liabilities
90,400 51,300
1,20,100
Plant 43,000 38,800 1,000 82,800
Accumulated Depreciation-
Plant
(18,200) (22,000)
(40,200)
Land 15,000 20,000 2,000 37,000

6COMPANY ACCOUNTING
Brands 8,000 - 1,200 9,200
Shares in ‘Y’ limited 24,600 - 24,600
Financial Assets 11,000 10,500 21,500
Cash 1,000 500
Inventories 4,000 3,000 800 7,800
Goodwill 2,000 1,800 1,800 2,000
Accumulated Impairment
Losses
- (1,300)
1,300 -
Total Assets 90,400 51,300 1,20,100