Acquisition Analysis And Consolidation Worksheet Entries
(1)
Acquisition analysis as on 1 July, 2015
|
Description |
Amount ($) |
|
Share Capital |
80,000 |
|
Retained Earnings |
29,600 |
|
General Reserve |
2,400 |
|
Fair value of inventories ((28000-25000)*(1-30%)) |
2,100 |
|
Fair value of plant ((56000-52000)*(1-30%)) |
2,800 |
|
Fair value of Land ((45000-40000)*(1-30%)) |
3,500 |
|
Fair value of Customer List (unrecorded) (18000*(1-30%)) |
12,600 |
|
Net fair value of assets acquired |
133,000 |
|
Consideration paid – (a) |
115,000 |
|
Non-controlling interest – (b) |
28,000 |
|
Aggregate of (a) and (b) |
143,000 |
|
Goodwill (143000-133000) |
10,000 |
|
Goodwill of Subsidiary |
|
|
Fair value (28000/20%) |
140,000 |
|
Fair value of net assets of Soda Ltd |
133,000 |
|
Goodwill of Soda Ltd |
7,000 |
|
Goodwill of Holding |
|
|
Goodwill acquired |
10,000 |
|
Goodwill of Soda Ltd |
7,000 |
|
Goodwill of Pepsi Ltd – Control premium |
3,000 |
(2) Consolidation Worksheet Entries as at 30 June, 2018
|
1. Business Combination Valuation Entries |
|
|
Description |
Amount ($) |
|
Accumulated Depreciation A/c |
13,000 |
|
To Plant A/c |
9,000 |
|
To Deferred tax liability A/c |
1,200 |
|
To Business Combination Valuation Reserve A/c |
2,800 |
|
Depreciation expense (4000/10*1) A/c |
400 |
|
Retained earnings (1/7/17) (4000/10*2) A/c |
800 |
|
To Accumulated depreciation A/c |
1,200 |
|
Deferred tax liability A/c |
360 |
|
To Income tax expense A/c |
120 |
|
To Retained earnings (1/7/17) A/c |
240 |
|
Gain/ loss on sale of land A/c |
5,000 |
|
To Income Tax expense A/c |
1,500 |
|
To Transfer from business combination valuation reserve A/c |
3,500 |
|
Unrecorded Customer List A/c |
18,000 |
|
To Deferred tax liability A/c |
5,400 |
|
To Business Combination Valuation Reserve A/c |
12,600 |
|
Goodwill A/c |
7,000 |
|
To Business Combination Valuation Reserve A/c |
7,000 |
|
2. Pre-Acquisition entry as on 31/7/18 |
|
|
Description |
Amount ($) |
|
Share Capital A/c |
64,000 |
|
Retained Earnings (1/7/17) A/c |
25,360 |
|
General Reserve A/c |
1,920 |
|
Goodwill A/c |
3,000 |
|
Business combination valuation reserve A/c ((2100+2800+3500+12600+7000)*80%) |
20,720 |
|
To Investment in Soda Ltd. A/c |
115,000 |
|
Transfer from business combination valuation reserve A/c |
2,800 |
|
To Business combination valuation reserve A/c |
2,800 |
|
3. Non-controlling interest share of equity at acquisition date (1/7/15) |
|
|
Description |
Amount ($) |
|
Share Capital A/c |
16,000 |
|
Retained Earnings (1/7/17) A/c |
5,920 |
|
General Reserve A/c |
480 |
|
Business combination valuation reserve A/c ((2100+2800+3500+12600+7000)*20%) |
5,600 |
|
To Non-controlling interest |
28,000 |
|
Non-controlling interest share of equity: 1/7/15 to 30/06/17 |
|
|
Description |
Amount ($) |
|
Retained Earnings (1/7/17) A/c ((36000-29600+2100+800-240)*20%) |
1,588 |
|
General Reserve A/c ((8000-2400)*20%)) |
1,120 |
|
Other components of equity A/c |
1,280 |
|
To Business combination valuation reserve A/c |
420 |
|
To Non-controlling interest A/c |
3,568 |
|
Non-controlling interest share of equity: 1/7/17 to 30/06/18 |
|
|
Description |
Amount ($) |
|
Non-controlling interest share of profit A/c [(14,400-400+120)*20%] |
2,824 |
|
To Non-controlling interest A/c |
2,824 |
|
Transfer from business combination valuation reserve A/c |
700 |
|
To Business combination valuation reserve A/c |
700 |
|
Gains/Losses: other components of equity A/c ((8000-6400)*20%) |
320 |
|
To Non-controlling interest A/c |
320 |
|
Non-controlling interest A/c |
1,600 |
|
To Interim Dividend Paid A/c |
1,600 |
|
Non-controlling interest A/c |
800 |
|
To Final Dividend declared A/c |
800 |
|
4. Other journal entries |
|
|
Description |
Amount ($) |
|
Elimination of Profit from opening inventory |
|
|
Retained Earnings (1/7/17) A/c |
1,400 |
|
Income tax expenses A/c |
600 |
|
To Cost of Sales A/c |
2,000 |
|
Elimination of Profit from closing inventory |
|
|
Sales A/c |
48,000 |
|
To Cost of Sales A/c |
44,000 |
|
To Inventory A/c |
4,000 |
|
Deferred tax asset A/c |
1,200 |
|
To Income tax expense A/c |
1,200 |
|
Non-controlling interest A/c ((4000-1200)*20%) |
560 |
|
To Non-controlling interest share of profit A/c |
560 |
|
Elimination of Profit from inter-company sale of plant |
|
|
Retained Earnings (1/7/17) A/c |
2,800 |
|
Deferred tax asset A/c |
1,200 |
|
To Plant A/c |
4,000 |
|
Non-controlling interest A/c (2800*20%) |
560 |
|
To Non-controlling interest share of profit A/c |
560 |
|
Accumulated Depreciation A/c |
1,200 |
|
To Retained Earnings (1/7/17) A/c (4000*20%*6/12) |
400 |
|
To Depreciation expenses A/c (4000*20%) |
800 |
|
Income tax expense A/c |
240 |
|
Retained Earnings (1/7/17) A/c |
120 |
|
To Deferred tax liability A/c |
360 |
|
Non-controlling interest share of profit A/c ((400-120)*20%) |
56 |
|
Retained Earnings (1/7/17) A/c ((800-240)*20%) |
112 |
|
To Non-controlling interest A/c |
168 |
|
Elimination of inter-company transactions |
|
|
Management and consultation fees A/c |
4,000 |
|
To Administration expenses A/c |
1,760 |
|
To Manufacturing expenses A/c |
2,240 |
|
Elimination of inter-company transaction of debenture |
|
|
Debentures A/c |
80,000 |
|
To Debentures in Soda Ltd. A/c |
80,000 |
|
Debenture Interest A/c |
4,000 |
|
To Non-controlling interest expenses A/c |
4,000 |
|
Elimination of dividend paid / declared by Soda Ltd. |
|
|
Dividend revenue A/c (8000*80%) |
6,400 |
|
To Dividend paid A/c |
6,400 |
|
Dividend Payable A/c (4000*80%) |
3,200 |
|
To Dividend declared A/c |
3,200 |
|
Dividend revenue A/c (4000*80%) |
3,200 |
|
To Dividend receivable A/c |
3,200 |
(1)
Preparation of Acquisition analysis
|
Description |
Amount ($) |
|
Share Capital |
560,000 |
|
Retained Earnings |
54,000 |
|
Fair value: Plant & Equipment |
14,000 |
|
Fair value of net assets & liabilities acquired |
628,000 |
|
% holding in A Ltd. |
35% |
|
Fair value of net assets acquired |
219,800 |
|
Consideration paid for shares in A Ltd. |
300,000 |
|
Goodwill |
80,200 |
(2)
Consolidation Worksheet Entries as at 30 June, 2018
|
Description |
Amount ($) |
|
Gain on revaluation of land |
|
|
Investment in A Ltd. A/c (28000*35%) |
9,800 |
|
To Asset revaluation surplus A/c |
9,800 |
|
Share in profit of current year |
|
|
Investment in A Ltd. A/c (refer WN-1) |
37,669 |
|
To Share of profit or loss of associates and joint ventures A/c |
37,669 |
|
Receipt of dividend |
|
|
Dividend Revenue A/c (30000*35%) |
10,500 |
|
To Investment in A Ltd. A/c |
10,500 |
|
WN-1: Profit Calculation |
|
|
Description |
Amount ($) |
|
Profit for the year |
126,000 |
|
Depreciation on fair value of plant & equipment |
(2,800) |
|
Unreliased profit in sale of vehicle |
(9,800) |
|
Reversal of excess depreciation charged on above profit |
1,225 |
|
Unreliased profit in closing inventory |
(7,000) |
|
Net Profit |
107,625 |
|
Investor’s share in profit (107,625*35%) |
37,669 |
|
Behappy Ltd. |
||
|
Journal entries for the year ending 30 June 2018 |
||
|
Date |
Description |
Amount ($) |
|
|
Sale of product |
|
|
13-Jun-18 |
Accounts receivable A/c (125,000/1.2536) |
99,713 |
|
To sales A/c |
99,713 |
|
|
Loss on restatement at year end |
||
|
30-Jun-18 |
Unrealized foreign exchange loss A/c (99713-(125000/1.2875)) |
2,626 |
|
To Accounts receivable A/c |
2,626 |
|
|
Receipt of money |
||
|
10-Jul-18 |
Cash A/c |
95,398 |
|
1,689 |
||
|
To Accounts receivable A/c |
97,087 |
|
|
Transfer of amount |
||
|
10-Jul-18 |
Foreign exchange loss A/c |
2,626 |
|
To Unrealised foreign exchange loss A/c |
2,626 |
|
Behappy Ltd. |
||
|
Journal entries for the year ending 30 June 2018 |
||
|
Date |
Description |
Amount ($) |
|
|
Purchase of asset |
|
|
15-Jun-18 |
Plant & Equipment A/c (300000/2.8079) |
106,841 |
|
To Accounts Payable A/c |
106,841 |
|
|
Gain on restatement at year end |
||
|
30-Jun-18 |
Accounts Payable A/c (106841-(300000/2.9946)) |
6,661 |
|
To Unrealised foreign exchange gain A/c |
6,661 |
|
|
Payment to vendor |
||
|
20-Jul-18 |
Accounts Payable A/c |
100,181 |
|
Foreign exchange loss A/c |
10,308 |
|
|
To Cash A/c (300000/2.7152) |
110,489 |
|
|
Transfer of amount |
||
|
20-Jul-18 |
Unrealised foreign exchange gain A/c |
6,661 |
|
To Foreign exchange loss A/c |
6,661 |