Consolidation: Principles And Accounting Requirements
- Acquisition analysis
|
Share capital |
100,000 |
|
Retained earnings |
175,000 |
|
Plant |
21,000 |
|
Computer equipment |
14,000 |
|
Net fair value of identifiable assets and liabilities |
310,000 |
|
Net fair value of identifiable assets and liabilities |
310,000 |
|
Consideration transferred |
250,000 |
|
Bargain purchase |
60,000 |
Pre-acquisition entries
|
Retained earnings |
175,000 |
|
|
Share capital |
100,000 |
|
|
BCVR |
35,000 |
|
|
Gain on bargain purchase |
60,000 |
|
|
Shares in Smarty Ltd. |
250,000 |
Worksheet entries
|
Accumulated depreciation on plant |
90,000 |
|
|
Plant |
60,000 |
|
|
Deferred tax liability |
9,000 |
|
|
BCVR |
21,000 |
|
|
Depreciation expense |
6,000 |
|
|
Accumulated depreciation |
6,000 |
|
|
Deferred tax liability |
1,800 |
|
|
Income tax expense |
1,800 |
|
|
Accumulated depreciation on computer equipment |
50,000 |
|
|
Computer equipment |
30,000 |
|
|
Deferred tax liability |
6,000 |
|
|
BCVR |
14,000 |
|
|
Depreciation expense |
4,000 |
|
|
Accumulated depreciation |
4,000 |
|
|
Deferred tax liability |
1,200 |
|
|
Income tax expense |
1,200 |
- Acquisition analysis
|
Share capital |
120,000 |
|
General reserve |
25,000 |
|
Retained earnings |
55,000 |
|
Land |
21,000 |
|
Inventories |
5,320 |
|
Machinery |
2,800 |
|
Vehicles |
4,200 |
|
Net fair value of identifiable assets and liabilities |
233,320 |
|
Consideration transferred |
250,000 |
|
Net fair value of identifiable assets and liabilities |
233,320 |
|
Goodwill |
16,680 |
|
Goodwill |
16,680 |
|
Goodwill recorded |
15,000 |
|
Unrecorded goodwill |
1,680 |
Worksheet entries
Post-acquisition entries
BCVR entries
|
Accumulated depreciation Machinery |
34,000 |
|
|
Machinery |
30,000 |
|
|
Deferred tax liability |
1,200 |
|
|
BCVR |
2,800 |
|
|
Depreciation expense |
350 |
|
|
Retained earnings |
1,050 |
|
|
Accumulated depreciation |
1,400 |
|
|
Deferred tax liability |
420 |
|
|
Income tax expense |
105 |
|
|
Retained earnings |
315 |
|
|
|
||
|
Land |
30,000 |
|
|
Deferred tax liability |
9,000 |
|
|
BCVR |
21,000 |
|
|
Inventory |
7,600 |
|
|
Deferred tax liability |
2,280 |
|
|
BCVR |
5,320 |
|
|
Accumulated depreciation Vehicles |
11,000 |
|
|
Vehicles |
5,000 |
|
|
Deferred tax liability |
1,800 |
|
|
BCVR |
4,200 |
|
|
Depreciation expense |
700 |
|
|
Retained earnings |
2,100 |
|
|
Accumulated depreciation |
2,800 |
|
|
Deferred tax liability |
840 |
|
|
Income tax expense |
210 |
|
|
Retained earnings |
630 |
|
|
Goodwill |
1,680 |
|
|
BCVR |
1,680 |
Sale of equipment
|
Equipment |
3,000 |
|
|
Loss on sale of equipment |
3,000 |
|
|
Income tax expense |
900 |
|
|
Deferred tax asset |
900 |
|
|
Depreciation expense |
300 |
|
|
Accumulated depreciation |
300 |
|
|
Deferred tax asset |
90 |
|
|
Income tax expense |
90 |
Sale of machinery classified as Inventory
|
Proceeds on sale of machinery |
7,800 |
|
|
Carrying amount of plant sold |
7,000 |
|
|
Cost of sales |
800 |
Interest expenses intercompany adjustments
|
Interest income |
2,000 |
|
|
Interest expenses |
2,000 |
Inventory sale
|
Retained earnings |
875 |
|
|
Income tax expense |
375 |
|
|
Cost of sales |
1,250 |
Transfer to general reserve
|
Retained earnings |
5,000 |
|
|
General reserve |
5,000 |
Pre-acquisition entries
|
Retained earnings |
55,000 |
|
|
General reserve |
25,000 |
|
|
Share capital |
120,000 |
|
|
Business combination valuation reserve |
50,000 |
|
|
Shares in Sing Song Ltd. |
250,000 |
References
Australian Accounting Standards Board. (2015, July). AASB 10: Consolidated Financial Statements. Retrieved August 10, 2018, from https://www.legislation.gov.au: https://www.legislation.gov.au/Details/F2015L01617
Australian Accounting Standards Board. (2004, June). AASB 3: Business Combinations. Retrieved August 10, 2018, from https://www.legislation.gov.au: https://www.legislation.gov.au/Details/F2005B01399.