AccountingAssignment2017.docx - QUESTION 1 1 July 2014 Step...

This preview shows page 1 - 4 out of 13 pages.

QUESTION 1 1 July 2014 Step 1: Acquisition analysis Fair value of Identifiable net assets Tiny ltd = = $200,000+$100,000+$60,000 (equity) +$20,000(1-30%) (plant) +$10,000(1-30%) (Land) +$8,000(1-30%) (inventory) -$2,000(1-30%) (accounts receivable) -$25,000(1-30%) (court case) -$10,000 [goodwill] $357,700 Consideration transferred = $420,000-$30,000 (dividend payable) $390,000 Goodwill = $390,000 - $357,700 - $10,000(already been recorded) $22,300 Step 2: BCVR Plant Accumulated Depreciation- Plant Plant (Close accumulated depreciation for plant) DR CR $200,000 $200,000 Plant Deferred Tax Liability Business combination valuation reserve (Valuation adjustment for plant) DR CR CR $20,000 $6,000 $14,000 Land Land Deferred Tax Liability Business combination valuation reserve (Valuation adjustment for land) DR CR CR $10,000 $3,000 $7,000 Inventory
Image of page 1
Inventory Deferred Tax Liability Business combination valuation reserve (Valuation adjustment for inventory) DR CR CR $8,000 $2,400 $5,600 Accounts Receivables Deferred tax asset Business combination valuation reserve Provision of Doubtful Debts (Valuation adjustment for accounts receivable) $600 $1,400 $2,000 Deferred tax asset Business combination valuation reserve Provision for damages- court case (Valuation adjustment for provision for damages) Dr Dr Cr $7,500 $17,500 $25,000 Step 3: Pre- acquisition analysis Share Capital General Reserves Retained Earnings Business combination valuation reserve Goodwill Share in Tiny Ltd DR DR DR DR DR CR $200,000 $100,000 $60,000 $7,700 $22,300 $390,000 Dividend Payable Dividend receivable DR CR $30,0000 $30,000 QUESTION 2 30 June 2015 Step 1: Acquisition analysis
Image of page 2
Fair value of INAs Tiny ltd = = $200,000+$100,000+$60,000 (equity) +$20,000(1-30%) (plant) +$10,000(1-30%) (Land) +$8,000(1-30%) (inventory) -$2,000(1-30%) (accounts receivable) -$25,000(1-30%) (court case) -$10,000 [goodwill] $357,700 Consideration transferred = $420,000-$30,000 $390,000 Goodwill = $390,000 - $357,700 - $10,000(already been recorded) $22,300 Step 2: BCVR Plant Accumulated Depreciation- Plant Plant (Close accumulated depreciation for plant) DR CR $200,000 $200,000 Plant Deferred Tax Liability Business combination valuation reserve (Valuation adjustment for plant) DR CR CR $20,000 $6,000 $14,000 Depreciation Expense Accumulated Depreciation-plant ($20,000/5) (Depreciation adjustment) DR CR $4,000 $4,000 Deferred tax liability Income tax expense (Tax effect on depreciation adjustment) DR CR $1,200 $1,200 Land Land Deferred Tax Liability Retained Earnings DR CR CR $10,000 $3,000 $7,000
Image of page 3

Want to read all 13 pages?

Image of page 4

Want to read all 13 pages?

You've reached the end of your free preview.

Want to read all 13 pages?

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern