acc 601 assignment

Posted by admin on February 2, 2018 in Articles

Acquisition analysis:
At 1st June 2014:
Consideration transferred110,000
Net fair value of identifiable net assets
Share capital
54,000Retained earnings
36,000Asset revaluation surplus
18,000Fair value adjustments:
Machinery
1,050Inventory
1,400Total fair value identifiable net assets110,450
Gain on bargain purchase 450a. The worksheet entries at 1st July 2014 are:
Depreciation expense
300Accumulated depreciation 300
Deferred tax liability
90Income tax expense 90Cost of sales
1,800 Income tax expense 540
Transfer from business combination valuation reserve1,260Inventory
200Deferred 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 110,0003. Transfer from Business combination valuation reserve 1,260
Business combination valuation reserve 1,260General reserve 3,600
Transfer to general reserve 3,600
Ethan
Ltd
Darren
LtdAdjustmentsGroup
Dr
Cr
Profit before tax
120 000
12 500
1
1
1,800
300
450
2130,850
Income tax expense
(56 000)
(4 200)
90
540
1
159,570
Profit
64 000
8 300
71,280
Retained earnings (1/7/14)
80 000
36 000
2
36,000
80,000…