Acc 260 Assignment

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Accounting 260

Major assignment

Kowloon Tong ltd- Jordan ltd
1. Acquisition analysis at 1 July 2008

Net fair value of identifiable assets and liabilities of Jordan ltd = 60000 +30000 +21000+6000
+6000(1-30%) Inventory
+1000(1-30%) Machinery
+6000(1-30%) Land +8000(1-30%) Equipment =131700
Consideration transferred = 137200
Goodwill =137200- 131700 =5500

2. BCVR entries at 30 June 2010

1) Machinery
Depreciation expense-machine Dr 100
Carrying amount Dr 700
Retained earnings Dr 140
Transfer from BCVR Cr 700 ITE Cr 240
2) Equipment
Accumulate dep’n Dr 6000
Equipment Dr 2000
DTL Cr 2400 BCVR Cr 5600

Dep’n expense- equipment Dr 1000 Retained earnings Dr 1000
Accumulate dep’n Cr 2000

DTL Dr 600
Income tax expense Cr 300 Retained earnings Cr 300 3)
Goodwill Dr 5500 BCVR Cr 5500

4)
Impairment loss Dr 2750 Accumulated impairment loss Cr 2750

5) Pre-acquisition entries at 30 June 2010
Retained earnings Dr 29400
Share capital Dr 60000
General reserve Dr 30000
Other reserve Dr 6000
BCVR Dr 11800 Share in Jordan Ltd Cr 137200

Transfer from BCVR Dr 700
BCVR Cr 700
Share Capital Dr 6000
Other reserve Cr 6000
Intergroup transactions

6) Dividend paid
Dividend revenue Dr 2000
Dividend paid Cr 2000 7) Dividend declared

Dividend payable Dr 3000
Dividend declared Cr 3000

Dividend Revenue Dr 3000
Dividend receivable Cr 3000

8) Profit in beginning inventory
Retained earnings Dr 140
Income tax expense Dr 60
Cost of sales Cr 200

9)
Sales revenue Dr 15000
Inventory Cr 1000 Cost of sales Cr 14000 DTA Dr 300
Income tax expense Cr 300
10)
Retain earning (1/7/09) Dr 700
DTA Dr 300
Equipment Cr 1000
Accumulated depreciation Dr...
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