Consolidation worksheet entries at acquisition date

Example BCVR adjustments at acquisition date

1 Land is undervalued by $10,000
Journal entry: 1
2. Buildings must be increased by $45,000.
DR Land 10,000 S Ltd= 100-20=80 + 45= $125
CR Deferred tax liability (DTL) 3,000
CR BCVR 7,000 A SINGLE JOURNAL CAN BE PREPARED AS FOLLOWS:
DR Buildings 25,000
DR Accum. Depn. 20,000
CR DTL 13,500 (45,000x0.30%)
CR BCVR 31,500 (45,000x0.70)
Financial statements P Ltd (000) S Ltd Adjustments Group
(000)
Dr Cr
Cash at bank 460 200 3 Contingent Liability
DR BCVR 2,100
Land - 200 DR Deferred tax asset 900
Building 100 CR Provision for legal claim 3,000

Accumulated depreciation (20)

Investment in S Ltd 400 4 Goodwill

Deferred Tax Asset Goodwill Dr 13,500
Goodwill (1,409.5- BCVR Cr 13,500
1395.9)
860 480
Deferred Tax Liability
BCVR
Business combination
valuation entries (BCVR)

Provision for legal claim

Accounts payable 160 130
Share capital 600 300
Retained earnings 100 50
860 480