PT Jaya Makmur purchased net assets from PT Adil Sejahtera on December 28, 2021.

In this
combination of business, PT Adil Sejahtera was later dissolved. The identifiable assets and
liabilities of PT Adil Sejahtera which were taken over on that date show the following data:

Account Book Value (Thousand Rp) Fair Value (Thousand Rp)

Assets:

Cash 60.000 60.000

Net Receivables 140.000 140.000

Inventory 225.000 275.000

Land 50.000 100.000

Building-net 400.000 600.000

Equipment-net 250.000 350.000

Patent 70.000

Total Assets 1.125.000 1.595.000

Liabilities:

Account Payable 80.000 80.000

Notes Payable 165.000 135.000

Other Liabilities 55.000 60.000

Total Liabilities 300.000 275.000

Net Assets 825.000 1.320.000

PT Jaya Makmur obtained 100% ownership of PT Adil Sejahtera by paying Rp600 million in
cash and issuing 50.000 shares with Rp10.000 of par value and Rp20.000 of market value. In
the combines business transaction, PT Jaya Makmur paid various costs for the acquisition Rp8
million and cost of issuing share Rp5 million.
Required: Prepare the journal entries made by PT Jaya Makmur to record the
business combination

PROBLEM 2 : Consolidation of Wholly Owned

On 1 January 20X1, PT Mawar acquired 100% of PT Tulip’s common stock for $450.000 when
Tulip’s net assets has a book value of $450.000. PT Mawar uses the equity method in
calculating investment. PT Mawar and PT Tulip’s trial balance for 31 Desember 20X1 is as
shown below:

Account PT Mawar PT Tulip

Cash 450.000 400.000

Accounts Receivables 320.000 60.000

Inventory 380.000 210.000

Building and Equipment 150.000 170.000

Land 60.000 200.000

COGS 250.000 100.000

Selling and Administrative 50.000 40.000

Expenses

Depreciation Expenses 25.000 17.000

Dividends Declared 15.000 5.000

Investment in Tulip 325.000 -

Accumulated Depreciation (50.000) (85.000)

Accounts Payable (480.000) (80.000)

Notes Payable (690.000) (602.000)

Common Stock (520.000) (270.000)

 Retained Earnings (30.000) (250.000)

Sales (220.000) (315.000)

Income from Tulip (34.000) -

Total -

Required:
1. Prepare journal entries in regards to PT Mawar’s investment on PT Tulip for the
year
20X1 using the equity method and cost method.
2. Prepare elimination and reconciliation entries for the consolidated financial
statements using the equity method and cost method.