Consolidation worksheetEthan Ltd acquired all the issued shares (ex div.) of Daen Ltd on 1 July 2017...

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Consolidation worksheetEthan Ltd acquired all the issued shares (ex div.) of Daen Ltd on 1 July 2017 fo$ XXXXXXXXXXAt this date Daen Ltd recorded a dividend payable of $10 000 and equity of:All the identifiable assets and liabilities of Daen Ltd were recorded at amounts equal to their fair values at acquisition date except for:The machinery was considered to have a further 5-year life. Of the inventory, 90% was sold by 30 June 2018. The remainder was sold by 30 June 2019.Both Daen Ltd and Ethan Ltd use the valuation method to measure the land. At 1 July 2017, the balance of Ethan Ltd’s asset revaluation surplus was $13 500.In May 2018, Daen Ltd transfeed $3000 from the retained earnings at 1 July 2017 to a general reserve.The tax rate is 30%.The following information was provided by the two companies at 30 June 2018.Required:1- Acquisition Analysis at 30 June 2018. 2- Worksheet Adjustment journal entries at 30 June 2018. 3- Complete Worksheet.

Ashish · Accepted Answer

Sheet1
	Solution-1
		Acquisition analysis
		At 1 June 2018:
		Net fair value of identifiable assets and liabilities of Darren Ltd	=	($54,000 + $36,000 + $18,000) (equity)
				+ $1,500 (1 – 30%) (plant)
				+ $2,000 (1 – 30%) (inventory)
			=	$110,450
		Consideration transferred	=	$110,000
		Gain on bargain purchase	=	$450
	Solution-2
		General Journal	Debit	Credit
		Business combination valuation entries
		Accumulated depreciation	$7,500
		Plant & machinery		$6,000
		Deferred tax liability		$450
		Business combination valuation reserve		$1,050
		Depreciation expense	$300
		Accumulated depreciation		$300
		Deferred tax liability	$90
		Income tax expense		$90
		Cost of sales	$1,800
		Income tax expense		$540
		Transfer from business combination valuation reserve		$1,

Consolidation worksheet Ethan Ltd acquired all the issued shares (ex div.) of Darren Ltd on 1 July 2017 for $ XXXXXXXXXXAt this date Darren Ltd recorded a dividend payable of $10 000 and equity of:...

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