1. Preparation of Acquisition analysis (Partial Acquisition) as on 1 July, 2016
|
Particulars |
Amount ($) |
|
|
Share Capital |
160,000 |
|
|
General Reserve |
10,000 |
|
|
Retained Earnings |
59,000 |
|
|
Fair value: Inventories |
2,800 |
|
|
Fair value: Plant |
6,300 |
|
|
Fair value: Land |
11,900 |
|
|
Fair value of net assets acquired in Sunshine Ltd. |
250,000 |
|
|
Ownership percentage |
80% |
|
|
Equivalent fair value of assets acquired in Sunshine Ltd. |
200,000 |
|
|
Consideration transferred for ownership |
240,000 |
|
|
Goodwill (excess of consideration paid over fair value of net assets acquired) |
40,000 |
Consolidation Worksheet Entries as at 1 July, 2016
|
Particulars |
Dr./Cr. |
Amount ($) |
|
Fair valuation of Plant |
||
|
Accumulated Depreciation |
Dr. |
130,000 |
|
To Plant |
Cr. |
121,000 |
|
To Deferred tax liability |
Cr. |
2,700 |
|
To Business Combination Valuation Reserve |
Cr. |
6,300 |
|
Fair valuation of Inventories |
||
|
Inventories |
Dr. |
4,000 |
|
To Deferred tax liability |
Cr. |
1,200 |
|
To Business Combination Valuation Reserve |
Cr. |
2,800 |
|
(fair valuation of Inventory) |
||
|
Fair valuation of Land |
||
|
Land |
Dr. |
17,000 |
|
To Deferred tax liability |
Cr. |
5,100 |
|
To Business Combination Valuation Reserve |
Cr. |
11,900 |
|
(fair valuation of Land) |
||
|
Goodwill on business combination |
||
|
Goodwill |
Dr. |
40,000 |
|
To Business Combination Valuation Reserve |
Cr. |
40,000 |
|
Pre Acquisition entry as on 1 July, 2016 |
||
|
Share Capital |
Dr. |
128,000 |
|
Retained Earnings |
Dr. |
47,200 |
|
General Reserve |
Dr. |
8,000 |
|
Business combination valuation reserve* |
Dr. |
56,800 |
|
To Investment in Sunshine Ltd. |
Cr. |
240,000 |
|
(acquisition of subsidiary) |
||
|
Non Controlling Interest in equity entry as on 1 July, 2016 |
||
|
Share Capital |
Dr. |
32,000 |
|
Retained Earnings |
Dr. |
11,800 |
|
General Reserve |
Dr. |
2,000 |
|
Business combination valuation reserve |
Dr. |
4,200 |
|
To Non Controlling Interest |
Cr. |
50,000 |
*(40,000+ 21,000*80%)
Consolidation Worksheet Entries as at 30 June, 2018
|
Particulars |
Dr./Cr. |
Amount ($) |
|
Fair valuation of Plant |
||
|
Accumulated Depreciation |
Dr. |
130,000 |
|
To Plant |
Cr. |
121,000 |
|
To Deferred tax liability |
Cr. |
2,700 |
|
To Business Combination Valuation Reserve |
Cr. |
6,300 |
|
(fair valuation of Plant) |
||
|
Depreciation expense on fair valuation of Plant |
||
|
Depreciation expense |
Dr. |
3,000 |
|
Retained earnings (1/7/17) |
Dr. |
3,000 |
|
To Accumulated Depreciation |
Cr. |
6,000 |
|
Income tax liability on above depreciation expense |
||
|
Deferred tax liability |
Dr. |
1,800 |
|
To Income tax expense |
Cr. |
900 |
|
To Retained earnings (1/7/17) |
Cr. |
900 |
|
Fair valuation of land |
||
|
Land |
Dr. |
17,000 |
|
To Deferred tax liability |
Cr. |
5,100 |
|
To Business Combination Valuation Reserve |
Cr. |
11,900 |
|
Goodwill on business combination |
||
|
Goodwill |
Dr. |
40,000 |
|
To Business Combination Valuation Reserve |
Cr. |
40,000 |
|
50% sale of inventory on 30 June, 2017 |
||
|
Retained earnings (1/7/17) |
Dr. |
2,000 |
|
To Retained earnings (1/7/17) |
Cr. |
600 |
|
To Transfer from business combination valuation reserve |
Cr. |
1,400 |
|
Transfer from BCVR to BCVR |
||
|
Transfer from business combination valuation reserve |
Dr. |
1,400 |
|
To Business combination valuation reserve |
Cr. |
1,400 |
|
Remaining 50% sale of inventory on 30 June, 2018 |
||
|
Cost of sales |
Dr. |
2,000 |
|
To Income tax expense |
Cr. |
600 |
|
To Transfer from business combination valuation reserve |
Cr. |
1,400 |
|
Pre Acquisition entry as on 30 June, 2018 |
||
|
Share Capital |
Dr. |
128,000 |
|
Retained Earnings |
Dr. |
48,320 |
|
General Reserve |
Dr. |
8,000 |
|
Business combination valuation reserve |
Dr. |
55,680 |
|
To Investment in Sunshine Ltd. |
Cr. |
240,000 |
|
Transfer from BCVR to BCVR |
||
|
Transfer from business combination valuation reserve |
Dr. |
1,400 |
|
To Business combination valuation reserve |
Cr. |
1,400 |
|
Non Controlling Interest in equity entries as on 30 June, 2018 |
||
|
Share Capital |
Dr. |
32,000 |
|
Retained Earnings |
Dr. |
12,080 |
|
General Reserve |
Dr. |
2,000 |
|
Business combination valuation reserve |
Dr. |
3,920 |
|
To Non Controlling Interest |
Cr. |
50,000 |
|
(Non Controlling Interest share) |
||
|
Dividend paid on Non Controlling Interest on 30 June, 2017 |
||
|
Non Controlling Interest |
Dr. |
1,000 |
|
To Dividend paid |
Cr. |
1,000 |
|
Dividend payable on Non Controlling Interest on 30 June, 2018 |
||
|
Non Controlling Interest |
Dr. |
2,000 |
|
To Dividend payable |
Cr. |
2,000 |
|
Non Controlling Interest share in profit – 30 June, 2017 |
||
|
Non Controlling Interest share of profit ** |
Dr. |
2,580 |
|
To Non Controlling Interest |
Cr. |
2,580 |
|
Non Controlling Interest share in profit – 30 June, 2018 |
||
|
Non Controlling Interest share of profit *** |
Dr. |
3,300 |
|
To Non Controlling Interest |
Cr. |
3,300 |
|
Elimination entries as on 30 June, 2018 for Dividend |
||
|
Dividend income |
Dr. |
4,000 |
|
To Dividend paid |
Cr. |
4,000 |
|
Dividend payable |
Dr. |
8,000 |
|
To Dividend receivable |
Cr. |
8,000 |
**((15000-3000+900)*20%)
***((20000-3000+900-2000+600)*20%)
2. Preparation of Acquisition analysis (Joint Venture) as on 1 July, 2016
|
Particulars |
Amount ($) |
Calculation basis |
||
|
Share Capital |
660,000 |
|||
|
Retained Earnings |
440,000 |
|||
|
General reserve |
100,000 |
|||
|
Fair value: Plant |
70,000 |
((11,00,000-1,000,000)*(1-30%)) |
||
|
Fair value: Land |
280,000 |
((1,600,000-1,200,000)*(1-30%)) |
||
|
Fair value of net assets acquired |
1,550,000 |
|||
|
% holding in Amani Ltd. |
25% |
|||
|
Fair value of net assets acquired |
387,500 |
|||
|
Consideration paid for shares in Amani Ltd. |
400,000 |
|||
|
Goodwill (excess of consideration paid over fair value of net assets acquired) |
12,500 |
Consolidation Worksheet Entries as at 30 June, 2018
|
Particulars |
Dr./Cr. |
Debit ($) |
Calculation basis |
|
|
Recording Gain on revaluation of Land |
||||
|
Investment in Amani Ltd. |
Dr. |
70,000 |
(400,000*(1-30%)*25%) |
|
|
To Retained earnings (1/7/17) |
Cr. |
70,000 |
||
|
Recording Gain on revaluation of Plant |
||||
|
Investment in Amani Ltd. |
Dr. |
17,500 |
(100,000*(1-30%)*25%) |
|
|
To Retained earnings (1/7/17) |
Cr. |
17,500 |
||
|
Recording Depreciation impact on above fair valuation of Plant |
||||
|
Retained earnings (1/7/17) |
Dr. |
14,000 |
(100,000/5*(1-30%)) |
|
|
Share of profit or loss of associates and joint ventures |
Dr. |
14,000 |
||
|
To Investment in Amani Ltd. |
Cr. |
28,000 |
||
|
Recording share in Profit of prior years |
||||
|
Investment in Amani Ltd. |
Dr. |
95,000 |
((820,000-440,000)*25%) |
|
|
To Retained earnings (1/7/17) |
Cr. |
95,000 |
||
|
Recording share in Profit of current year |
||||
|
Investment in Amani Ltd. |
Dr. |
105,000 |
(420,000*25%) |
|
|
To Share of profit or loss of associates and joint ventures |
Cr. |
105,000 |
||
|
Recording Dividend received |
||||
|
Dividend Revenue |
Dr. |
10,000 |
(40000*25%) |
|
|
To Investment in Amani Ltd. |
Cr. |
10,000 |
||
|
Recording share in OCI |
||||
|
Investment in Amani Ltd. |
Dr. |
1,750 |
(10,000*(1-30%)*25%) |
|
|
To Share of profit or loss of associates and joint ventures |
Cr. |
1,750 |
3. Soul Ltd.
Journal entries for the year ending 30 June 2018
|
Date |
Particulars |
Dr./Cr. |
Amount ($) |
Calculation basis |
|
|
Sale of product |
|||||
|
01-Feb-18 |
Accounts receivable |
Dr. |
519,481 |
(400,000/0.77) |
|
|
To sales |
Cr. |
519,481 |
|||
|
Receipt of 30% payment |
|||||
|
30-Apr-18 |
Cash |
Dr. |
160,000 |
(400,000*30%/0.75) |
|
|
To Accounts receivable |
Cr. |
155,844 |
(400,000*30%/0.77) |
||
|
To Foreign exchange gain |
Cr. |
4,156 |
|||
|
Reinstate the value of AR at the end of year |
|||||
|
30-Jun-18 |
Accounts receivable |
Dr. |
36,364 |
((400,000*70%)/(0.77-0.70)) |
|
|
To Unrealized foreign exchange gain |
Cr. |
36,364 |
|||
|
Receipt of 20% payment |
|||||
|
31-Jul-18 |
Cash |
Dr. |
108,108 |
||
|
Foreign exchange loss |
Dr. |
6,178 |
|||
|
To Accounts receivable |
Cr. |
114,286 |
((400,000*20%)/0.70) |
||
|
Receipt of balance 50% payment |
|||||
|
31-Aug-18 |
Cash |
Dr. |
256,410 |
||
|
Foreign exchange loss |
Dr. |
29,304 |
|||
|
To Accounts receivable |
Cr. |
285,714 |
((400,000*50%)/0.70) |
||
|
Transfer of amount recorded |
|||||
|
31-Aug-18 |
Unrealized foreign exchange gain |
Dr. |
36,364 |
||
|
To Foreign exchange gain |
Cr. |
36,364 |
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