Acquisition Analysis

Fair value of identifiable net assets acquired:

Share capital 100,000
Retained profits 20,000
General reserve 30,000
Business combination valuation reserve 35,000
185,000
Fair value of purchase consideration (Cost of acquisition) 240,000
Goodwill on acquisition/(gain on bargain purchase) 55,000

393682799.xlsx
 Debit Credit
$ $
a. Revaluation of land
Land 50,000
Deferred tax liability 15,000
Business combination valuation reserve 35,000

b. Goodwill
Goodwill 55,000
Business combination valuation reserve 55,000

c. Elimination of investment in subsidiary

Retained profits - 1 July 20X1 20,000
Share capital 100,000
General reserve 30,000
Business combination valuation reserve 90,000
Investment in H Ltd 240,000

d. Adjustment for impairment of goodwill

Goodwill impairment loss 5,000
Accumulated impairment losses 5,000

350,000 350,000

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CONSOLIDATED WORKSHEET

Eliminations/Adjustments
Account G Ltd H Ltd Debit Credit Consolidation
Operating revenue 522,500 245,000 767,500
Cost of sales
Opening stock - 1 July 20X1 110,000 20,000 130,000
Purchases 350,000 160,000 510,000
460,000 180,000 640,000
Closing stock - 30 June 20X2 120,000 55,000 175,000
Cost of sales 340,000 125,000 465,000
Gross Profit 182,500 120,000 302,500
Administrative expenses 24,000 18,000 42,000
Goodwill impairment loss d 5,000 5,000
Financial expenses 23,000 25,000 48,000
Selling expenses 23,000 29,000 52,000
Total expenses 70,000 72,000 147,000
Operating profit before income tax 112,500 48,000 155,500
Income tax expense 50,000 18,000 68,000
Operating profit after income tax 62,500 30,000 87,500
Retained profits 1 July 20X1 50,000 20,000 c 20,000 50,000
112,500 50,000 137,500
Transfer to general reserve 50,000 15,000 65,000
Retained profits 30 June 20X2 62,500 35,000 72,500

Share capital 400,000 100,000 c 100,000 400,000

General reserve 60,000 45,000 c 30,000 75,000
Business combination valuation reserve c 90,000 35,000 a
55,000 b
Creditors 35,000 40,000 75,000
Current tax liability 45,000 15,000 60,000
Deferred tax liability 15,000 a 15,000
Bank loan 92,500 50,000 142,500
695,000 285,000 840,000

Cash 10,000 5,000 15,000

Receivables 40,000 20,000 60,000
Inventory 120,000 55,000 175,000
Other current assets 5,000 10,000 15,000

Investment in H Ltd 240,000 0 240,000 c 0

Plant and machinery 310,000 110,000 420,000
Accumulated depreciation (180,000) (20,000) (200,000)
Land 140,000 100,000 a 50,000 290,000
Goodwill b 55,000 55,000
Accumulated impairment losses 5,000 d (5,000)
Other non-current assets 10,000 5,000 15,000
695,000 285,000 350,000 350,000 840,000

393682799.xlsx
G Ltd and its controlled entitites
Statement of Comprehensive Income
for the year ending 30 June 20X2
Economic
Entity Parent Entity
$
Operating revenue 767,500 522,500
Cost of goods sold
Opening stock - 1 July 20X1 130,000 110,000
Purchases 510,000 350,000
640,000 460,000
Closing stock - 30 June 20X2 175,000 120,000
465,000 340,000
Gross Profit 302,500 182,500

Administrative expenses 42,000 24,000

Goodwill impairment loss 5,000 0
Financial expenses 48,000 23,000
Selling expenses 52,000 23,000
Total expenses 147,000 70,000

Operating profit before tax 155,500 112,500

Income tax expense 68,000 50,000
Operating profit after tax 87,500 62,500
Retained Profits - 1 July 20X1 50,000 50,000
Total available for appropriation 137,500 112,500
Transfer to general reserve 65,000 50,000

Retained Profits - 30 June 20X2 72,500 62,500

Note: This is a working income statement from which the correctly formatted statements would be prepared.

393682799.xlsx
G Ltd and its controlled entities
Statement of Financial Position
as at 30 June 20X2

Economic Parent
entity entity
Assets
Current Assets
Cash 15,000 10,000
Receivables 60,000 40,000
Inventory 175,000 120,000
Other current assets 15,000 5,000
Total Current Assets 265,000 175,000

Non Current Assets

Investment in H Ltd 240,000
Plant and machinery 220,000 130,000
Land 290,000 140,000
Goodwill (net) 50,000
Other non-current assets 15,000 10,000
Total Non Current Assets 575,000 520,000
Total Assets 840,000 695,000

Liabilities
Current Liabilities
Creditors 75,000 35,000
Current tax liability 60,000 45,000
Total Current Liabilities 135,000 80,000

Non Current Liabilities

Deferred tax liability 15,000
Bank loan 142,500 92,500
Total Non Current Liabilities 157,500 92,500
Total Liabilities 292,500 172,500

Net Assets 547,500 522,500

Equity
Share capital 400,000 400,000
General reserve 75,000 60,000
Retained earnings 72,500 62,500
Total Equity 547,500 522,500

Note: This is a working balance sheet from which the correctly formatted financial statement would be prepared.

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CONSOLIDATED WORKSHEET

Eliminations/Adjustments
Account G Ltd H Ltd Debit Credit Consolidation
Operating revenue 522,500 245,000
Cost of sales
Opening stock - 1 July 20X1 110,000 20,000
Purchases 350,000 160,000
460,000 180,000
Closing stock - 30 June 20X2 120,000 55,000
Cost of sales 340,000 125,000
Gross Profit 182,500 120,000
Administrative expenses 24,000 18,000
Financial expenses 23,000 25,000
Selling expenses 23,000 29,000
Total expenses 70,000 72,000
Operating profit before income tax 112,500 48,000
Income tax expense 50,000 18,000
Operating profit after income tax 62,500 30,000
Retained profits 1 July 20X1 50,000 20,000
112,500 50,000
Transfer to general reserve 50,000 15,000
Retained profits 30 June 20X2 62,500 35,000

Share capital 400,000 100,000

General reserve 60,000 45,000

Creditors 35,000 40,000

Current tax liability 45,000 15,000

Bank loan 92,500 50,000

695,000 285,000

Cash 10,000 5,000

Receivables 40,000 20,000
Inventory 120,000 55,000
Other current assets 5,000 10,000

Investment in H Ltd 240,000 0

Plant and machinery 310,000 110,000
Accumulated depreciation (180,000) (20,000)
Land 140,000 100,000
Other non-current assets 10,000 5,000

695,000 285,000 0 0

393682799.xlsx
Balance Sheet
as at 30 June 20X2

G Ltd H Ltd
ASSETS
Current Assets
Cash 10,000 5,000
Receivables 40,000 20,000
Inventory 120,000 55,000
Other current assets 5,000 10,000
Total Current Assets 175,000 90,000

Non Current Assets

Investment in H Ltd 240,000
Plant and machinery 310,000 110,000
Accumulated depreciation (180,000) (20,000)
Land 140,000 100,000
Other non-current assets 10,000 5,000
Total Non Current Assets 520,000 195,000
Total Assets 695,000 285,000

LIABILITIES
Current Liabilities
Creditors 35,000 40,000
Current tax liability 45,000 15,000
Total Current Liabilities 80,000 55,000

Non Current Liabilities

Bank loan 92,500 50,000
Total Non Current Liabilities 92,500 50,000
Total Liabilities 172,500 105,000

Net Assets 522,500 180,000

Equity
Share capital 400,000 100,000
General reserve 60,000 45,000
Retained earnings 62,500 35,000
Total Equity 522,500 180,000
Income Statement
for the year ending 30 June 20X2
G Ltd H Ltd
Operating revenue 522,500 245,000
Cost of sales
Opening stock - 1 July 20X1 110,000 20,000
Purchases 350,000 160,000
460,000 180,000
Closing stock - 30 June 20X2 120,000 55,000
Cost of sales 340,000 125,000
Gross Profit 182,500 120,000
Administrative expenses 24,000 18,000
Financial expenses 23,000 25,000
Selling expenses 23,000 29,000
Total expenses 70,000 72,000
Operating profit before income tax 112,500 48,000
Income tax expense 50,000 18,000
Operating profit after income tax 62,500 30,000
Retained profits 1 July 20X1 50,000 20,000
112,500 50,000
Transfer to general reserve 50,000 15,000
Retained profits 30 June 20X2 62,500 35,000