Acquisition Analysis at 1 July 2013

1 July 2013 - Ben Ltd acquired all shares Ben Ltd Sam Ltd Notes
Debit Credit Debit Credit

Equity
Share Capital 100,000
Reserves 5,000
Retained Earnings 10,000
Carrying Am Fair Value
Plant (Cost 120000) 2,000 at 70% 94,000 96,000
Land 5,000 at 70% 80,000 85,000
Inventory 4,000 at 70% 20,000 24,000
Databases 6,000 at 70% Fair Value in August 2013 with life o

Total Assets 126900

Liabilities

Dividend Payable (Transferred to Ben Ltd ### 6000 (-6000)

Contingent Liability (Lawsuit) 10,000 at 70%
Goodwill 5,000

Net Fair Value of Sam Ltd 114,900 Total Assets - Goodwill - Liability@70%

Transferred by Bob 117500

Goodwill 2600
Recorded Goodwill 5000
Unrecorded Goodwill -2400

At 30 June 2017
Business Combination Debit Credit

Depreciation 26,000
Plant 24000
Deferred Tax Liability 600
Business Combination Reserve 1400 5000-3600

Depreciation Expense 200

Retained Earnings 600
Depreciation 800 10% x 2000 per year for 4 years
Tax Liability 240
Income Tax Expense 60
Retained Earnings 180

Databases Amortised 1500 Life of 4 years

Income Tax 450
Retained Earnings 3150 Moving from Inventory
Transfer from Combination Reserve 4200

Total Transfers 7000

Income Tax 3000
Damages (Lawsuit) 7500
Gain from the Lawsuit 2500

Total Losses 7000

Total Reserve 2400
Goodwill 9400

Pre Acquisition Entries (1st July 2013) debit credit

Retained Earnings 10000
Share Capital 100000
Reserves 5000
Combination Valuation Reserve 2500
Shares in Sam Ltd 117500

Divident Payable 6000 6000

Post Acquisition entries (30th June 2017)

Sale of Inventory
Payment of Dividend
Sale of Land
Reserve transfer of 3000 (Previous)
Reserve transfer of 2000 (Recent)
Settlement of Court Case
Database life over

Retained Earnings 19300 10000 + 2800 + 3500 + 3000

Share Capital 100000
Reserves 2000
Combination Valuation Reserve 3800
Shares in Sam Ltd 117500

Transfer from Reserves 2000

Reserves 2000
Business valuation reserve 7500 (Court Case)
Business Reserve Transfer 7500
Transfer from Reserve 6000 (Database decomissioned)
Business Valuation Reserve 6000
 Fair Value in August 2013 with life of 4 years

Liability@70%
 Mercy Limited
Statement of Financial Position
As at 30 June 2016 Notes 1-Jul-15 30 June 2016
"000 "000
Assets
Current
AASB 101.54(h) Trade and Other Receivables 1 540
AASB 101.54(g) Inventories 2 520
Total Current 1120

Non-Current
Property Plant and Equipment
AASB 101.54(a) Tangible Assets 3 2,300
AASB 101.54(a) Intangible Assets 4 810
AASB 101.54(a) Deferred Tax Assets
Non-Current 3110

Total Assets 4230

Liabilities
Current
AASB 101.51(c) Trade and Other Payables 5 400
AASB 101.60, 101.69 Current Tax Liability 6 249
AASB 101.54(k) Dividend Payable 7 256
AASB 101.54(n)
AASB 101.70 Non-Current

Borrowings 8 200

AASB 101.54(m) Net Assets 3065

Equity
Share Capital 9 2400
General Reserve 10 260 290
AASB 101.54(r) Retained Earnings 11 80 375
AASB 101.54(r)
AASB 101.54(r) Total Equity 3065
581 profit - 256 for dividend - 30 k reserve + 80 from previous year
d - 30 k reserve + 80 from previous year
 Mercy Ltd.
Notes to the Financial Statements
For the year ended on June 30, 2016

Note - 1: Trade and other receivables

Particulars Amount
AASB 101.54(h) Accounts receivable 600,000
AASB 101.54(l) Allowance for doubtful debts (60,000)
Total 540,000

Note - 2: Inventories
Particulars Amount
Inventories 520,000
Total 520,000

Note - 3: Property, plant & equipment - Tangible assets

Particulars Amount
AASB 101.54(a) Land
- cost 600,000

AASB 101.54(a) Buildings

- cost 900,000

AASB 101.54(a) Plant and equipment

- cost 800,000
- accumulated dep 800,000

Total 2,300,000

Note - 4: Property, plant & equipment - Intangible assets

Particulars Amount
AASB 101.54(e) Goodwill
- cost 300,000
- accumulated impairment loss 300,000

AASB 101.67 Long-term Investments

Cost 460,000

AASB 101.57 Other Debtors 50,000

Total 810,000

Note - 5: Trade and other payables

Particulars Amount
Accounts payable 400,000
Total 400,000

Note - 6 Current tax liability

Particulars Amount
Current tax liability 249,000
Total 249,000
Note 7: Dividend Payable by the Company
Particulars Amount ($)
Amount per share $0.08
Number of Shares 3,200,000
Total Amount Payable 256,000

Note - 8: Borrowings
Particulars Amount
Bank overdraft (at call) 200,000
Total 200,000

Note 9: Share Capitals

Particulars Amount
Number of Shares 3,200,000
Capital per share 2,400,000
Total Liable Capital 2,400,000

Note 10: General Business Reserve

Particulars Amount
General Reserve 260,000
Transfer from Earnings 30,000
Total Amount in Reserves 290,000

Note 11: Retained Earnings

Particulars Amount
Starting Earnings 80,000
Transfer to Reserve -30,000
Profits after Dividend 325,000
Total Earnings 375,000
 Mercy Ltd
Statement of Changes in Equity
For the year ended on June 30, 2016
Share Capital General Reserve Revaluation Surpl Retained Ear Total
/$000 /$000 /$000 /$000 /$000
Balance at 1 July 2015 260 80
Profit for Period 581 581
Total Comprehensive Income for the year 581

Issue of Share Capital 2,400

Transfer to General Reserve 30 -30
Transactions with Owners
Dividends -256 -256 -256
Other Income
Balance at 30 June 2016 2,400 290 375 3065