Acquisition analysis

Cash
Share capital
General reserve
Retained earning
Fair value adjustment
Total equity
Good will

231600
150000
3000
87000
(1400)
238600*70% =167020
64580.

Full goodwill : 231600+88000 238600= 81000 64580 = 16420

( good will NCI)
DR Good will 16420
CR NCI equity 16420.
Dr Share capital 105000
Dr GR
2100
DR RE
60900
Dr good will64580
CR FVA
980
CR Investment in subsidiary 231600
Dr Retained earning 5600
Cr FVA
5600
Dr Accumulated dep
Cr Equipment
Cr FVA
Cr DTL

25000
15000
7000
3000

Dr FVA
14000
Cr Retained earning 14000
Adjust for depreciation
Dr Depreciation expense 1000
Dr Retained earning
3000
CR Accumulated dep 4000
Dr DTL 1200
Cr RE 900
CR Income tax expense 300
Dr Cost of good sold 3000
Cr Retained earning 3000
Dr Re tained earning 900

Cr Incom tax expense 900

Dr Retain ed earning 5000
Cr Cost of good sold 5000
DR Income tax expense 1500
Cr Retained earning 1500
Dr Sale revenue 15000
Cr COGS 15000
Dr Sale revenue 10000
Cr COGS 9200
Cr inventory 800
Dr DTA 240
Cr Income tax expense 240.
Dr Equipment 2000
DR Gain on sale 4000
Cr Accumulated dep 6000
DR DTA 1200
Cr Income tax expense 1200.
Dr Accumulated Dep 1000
Cr Depreciation expense 1000
DR Income tax expense 300
Cr DTA 300
DR Management revenue 5000
Cr Management expense 5000
Dr Interest revenue 1000
Cr Interest expense 1000
DR Dividend revenue 10500
Cr Dividend declared 3500
Cr Dividend paid 7000
DR Dividend payable 3500
Cr Dividend receivable 3500
Dr Loan payable 100000
Cr Loan receivable 100000

NCI memorandum
Subsidiary
Profit for the year 27300
-Dep expense
1000
+tax effect
300
+COGS
5000
-tax effect
1500
-Unrealised profit 2000
tax effect
600
- Unrealised profit 4000
+ tax effect
1200
+ Dep expense 1000
-tax effect 300
+ management expense 5000
+ Interest expense
1000
Adjusted profit 35600
+Open retained earning 45000
-Adjust land sold
5600
+ Adjust contingent liability 14000
-Dep
3000
+ tax effect
900
-COGS
5000
+tax effect
1500
Ending RE
83400

NCI 30%
8190
300
90
1500
450
600
180
1200
360
300
90
1500
300
10680
13500
1680
4200
900
270
1500
450
25020