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Find your following assignment question and follow the directions .

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The assignment must be typed, use Arial font, 12, to avoid plagiarism, make sure you do proper referencing, a WORD format file soft copy to be submitted in Turnitin before the due date. Please ensure you provide your ID numbers and full name at the first page.Late assignments will be penalised, 5%of total available marks deduction per day.

For the following case provide all:

a)calculations

b) accounting standards

c) related journal entries

d) relevant explanations

All the identifiable assets and liabilities of Davis Ltd were recorded at amounts equal to their fair values at acquisition date except for the following;

Account

Cost

Carrying Amount

Fair value

Further life- in Year

Land

Fittings

$20,000

Liabilities

$50,000

All inventories on hand at 1 July 2019 are sold by 30 June 2020. Further life of the assets are listed on the above table. Alma Ltd uses thepartial goodwill method.

Tax rate:30%

Required

1- Prepare the acquisition analysis at acquisition date.

2- Prepare the business combination valuation entries and pre-acquisition entry at acquisition date.

3- Prepare the journal entry to recognise NCI at acquisition date.

5- Explain how the step 1 to 4 will change if thefull goodwill methodis used.

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Pulkit · Accepted Answer

PARTIAL GOODWILL METHOD
1.) Acquisition Analysis as at 01 July, 2019
	PARTICULARS
	AMOUNT
	AMOUNT
	COMMENTS
	
	(in $)
	(in $)
	
	Purchase Consideration  (A)
	 
	628000
	Consideration 
	LESS: 
	 
	 
	 
	Share Capital
	 
	220000
	 
	Asset Revaluation Reserve
	 
	94000
	 
	Retained earnings
	 
	75000
	 
	TOTAL (B)
	 
	389000
	 
	LESS: Fair value Adjustments
	 
	 
	 
	Furniture
	 
	176000
	(396000-220000)
	Land
	 
	150000
	(338,000-188,000)
	Inventory
	 
	75000
	(169000-94000)
	Total (C)
	 
	401,000
	 
	 
	 
	280,700
	401000(1-30%)
	Net Asset Acquisition Cost
	
	616124
	(389000+280700)*92%
	GOODWILL (A -B-C)
	 
	11,876
	 
Note-
The calculation of Non Controlling Interest involves the following calculation which is (389000+280700)*8%= $53576.
2.)  Business Combination Valuation entry and Pre acquisition entry at Valuation date-
a.)     Furniture Dr.  $176000
                  DTL Cr.                $52800
                  BCVR Cr.           $123200
b.)     Land Dr.    $ 150000
                 DTL Cr.                $45000
                 BCVR Cr.           $105000
c.)       Inventory Dr.    $ 75000
                 DTL Cr.                $22500
                 BCVR Cr.            $52500
Pre Acquisition Entry at 01 July 2019
                         Dr.   Retained Earnings                           $ 69000
     Dr. Share Capital                                    $ 202400
     Dr. Asset Revaluation Surplus                $86480
     Dr. Business Valuation Reserve            $258244
     Dr. Goodwill	       $11876
	Shares in Davis Ltd.

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