Account

1. Acquisition analysis at 1 July 2008 | | |

| | | | | | | | | |

Fair value of INA = $180000 (share capital) + $20000 (general reserve) | | |

| | + $30000 (plant maintenance reserve) + $72000 (retained earnings) |

| | + $25000 (1-30%) (BCVR Land) | | | | |

| | + $2000 (1-30%) (BCVR Buildings) | | | |

| | + $15000 (1-30%) (BCVR Inventory) | | | |

| | + $8000 (1-30%) (BCVR Plant) | | | | |

| | + $2000 (1-30%) (BCVR Delivery Truck) | | | |

| | + $45000 (1-30%) (BCVR Patent) | | | | |

| | - $30000 (1-30%) (BCVR Damages) - $12000 (Goodwill) | |

| | = $336900 | | | | | | |

| | | | | | | | | |

Consideration Transfer ＝ $360000 | | | | | |

| | | | | | | | | |

Goodwill ＝ $360000 - $336900 ＝ $23100 | | | | | |

| | | | | | | | | |

Goodwill unrecorded ＝$23100 - $12000 ＝ $11100 | | | | |

2. The BCVR & pre-acquisition worksheet journal entries at 30 June 2011. (20 Marks) | | |

| | Dr | Cr |

Land | | | |

Land | | 25000 | |

| Deferred tax liability | | 7500 |

| BCVR | | 17500 |

| | | |

Buildings | | | |

Accumulated depreciation - Buildings | 20000 | |

| Buildings | | 18000 |

| BCVR | | 1400 |

| Deferred tax liability | | 600 |

| | | |

Depreciation expense - Buildings | 200 | |

Retained earnings (1/7/10) | | 400 | |

| Accumulated depreciation - Buildings | 600 |

| | | |

Deferred tax liability | | 180 | |

| Income tax expense | | 60 |

| Retained earnings (1/7/10) | | 120 |

| | | |

Plant | | | |

Accumulated depreciation - Plant | 78000 | |

| Plant | | 70000 |

| BCVR | | 5600 |

| Deferred tax liability | | 2400 |

| | | |

Depreciation expense - Plant | | 1600 | |

Retained earnings (1/7/10) | | 3200 | |

| Accumulated depreciation - Plant | 4800 |

| | | |

Deferred tax liability | | 960 | |...