acc 601 assignment

acc 601 assignment

  • Submitted By: ashvir
  • Date Submitted: 03/01/2016 7:55 PM
  • Category: Business
  • Words: 516
  • Page: 3

´╗┐Acquisition analysis:
At 1st June 2014:
Consideration transferred

110,000
Net fair value of identifiable net assets


Share capital
54,000

Retained earnings
36,000

Asset revaluation surplus
18,000

Fair value adjustments:


Machinery
1,050

Inventory
1,400

Total fair value identifiable net assets

110,450
Gain on bargain purchase

450

a. The worksheet entries at 1st July 2014 are:


Depreciation expense
300

Accumulated depreciation

300


Deferred tax liability
90

Income tax expense

90

Cost of sales
1,800

Income tax expense

540
Transfer from business combination valuation reserve

1,260

Inventory
200

Deferred tax liability

60
Business combination valuation reserve

140
b. Pre-acquisition entries:

1. At 1st July 2014:

Retained earnings (1/7/14) 36,000
Share capital 54,000
Asset Revaluation surplus 18,000
Business combination valuation reserve 2,450
Gain on bargain purchase 450
Shares in Darren Ltd 110,000


The entry at 30 June 2015 is affected by:
Sale of inventory
Transfer to general reserve


2.
Retained earnings (1/7/14) 36,000
Share capital 54,000
Asset Revaluation surplus 18,000
Business combination valuation reserve 2,450
Gain on bargain purchase 450
Shares in Darren Ltd 110,000

3. Transfer from Business combination valuation reserve 1,260
Business combination valuation reserve 1,260

General reserve 3,600
Transfer to general reserve 3,600






Ethan
Ltd
Darren
Ltd

Adjustments

Group




Dr
Cr


Profit before tax
120 000
12 500
1
1
1,800
300
450
2

130,850
Income tax expense
(56 000)
(4 200)


90
540
1
1

59,570
Profit
64 000
8 300




71,280
Retained earnings (1/7/14)
80 000
36 000
2
36,000


80,000...

Similar Essays