Financial Accounting - Consolidations & Acquisitions

Question 1: Consolidations

On 1 July 2011 Martin Ltd acquired all of the shares of Lewis Ltd for

At the 1 July 2011 the statement of financial position of Lewis Ltd was as follows:

Current Assets

Cash at Bank

Accounts Receivable (net)

Inventory

Non-Current Assets

Land

Motor Vehicles

Plant and Equipment

Goodwill

The following information about the value of assets was provided:

Inventory

Motor Vehicles

Plant and Equipment

The Motor Vehicle is expected to have a further 4 years useful life and the Plant and Equipment

is expected to have a further 5 years useful life. All inventory on hand at 1 July 2011 was sold

by 30 June 2012. At 1 July 2011 Lewis Ltd had a contingent liability of $70,000

The contingent liability was settled in February 2012 for $67,900

The tax rate is 30%.

Required:

a. Do the necessary acquisition analysis and provide the business combination valuation entries

    and the pre-acquisition adjustment entry at acquisition date.

b. Provide the business combination valuation entries and the pre-acquisition adjustment

     entry at 30 June 2013.