Acquisition analysis at 1 July 2013

Share capital 300,000

General Reserve 96,000
Retained Earning 56,000
Inventory 1,400 (12,000-10,000) (1-30%)
Plant 3,500 (25,000-20,000) (1-30%)
Land 3,500 (15,000-10,000) (1-30%)
TOTAL 460,400

Considered transfer 472,000

Goodwill 11,600 ( 472,000 - 460,400 )

Business Combination Valuation Entries

7/1/2013 DR Inventory
Cr Deffered Tax Liability
CR Business combination Valuation reserve
(Business Combination Valuation Adjustment to increase inventory to fair value)

7/1/2013 DR Land
CR Deferred Tax Liability
CR Business combination Valuation reserve
(Business Combination Valuation Adjustment to increase land to fair value)

7/1/2013 DR Plant
CR Deferred Tax Liabilities
CR Deferred Tax Liabilities
(Business Combination Valuation Adjustment to increase Plant and Equipment to

7/1/2013 DR Goodwill
CR Business combination Valuation reserve
(Business Combination Valuation Adjustment to recognise Goodwill arising from

Pre-acquisition Entries
7/1/2013 DR Share Capital
DR General Reserve
DR Reatained Earnings (30/6/2013)
DR Business combination Valuation reserve
CR Share in White Ltd
(Pre-acquisition entry to eliminate investment in subsidiary)
 DR CR
2,000
ax Liability 600
ombination Valuation reserve 400
nation Valuation Adjustment to increase inventory to fair value)

5,000
Tax Liability 1,500
ombination Valuation reserve 3,500
nation Valuation Adjustment to increase land to fair value)

5,000
Tax Liabilities 1,500
Tax Liabilities 3,500
nation Valuation Adjustment to increase Plant and Equipment to fair value)

11,600
s combination Valuation reserve 11,600
nation Valuation Adjustment to recognise Goodwill arising from acquisition)

DR CR
300,000
96,000
rnings (30/6/2013) 56,000
mbination Valuation reserve 20,000
472,000
entry to eliminate investment in subsidiary)