Accounting 9706 · AS & A Level · Business acquisition and merger
Business acquisition and merger — practice question
Wembo and Bob form a partnership and divide profits and losses in the ratio $3 : 2$. A separate business, C Limited, has been operating for many years. Summarised statements of financial position for 31 March 2017 are given.
(a)[1]
State the meaning of the term ‘revaluation reserve’.
(b)[16]
Prepare the partners’ capital accounts at 31 March 2017 so that the partnership closing entries are shown.
(c)[4]
Prepare the equity and reserves section of the statement of financial position for C Limited at 31 March 2017 straight after the partnership purchase.
(d(i))[2]
Explain one advantage to Wembo and Bob of being issued ordinary shares.
(d(ii))[2]
Explain one advantage to Wembo and Bob of being issued cumulative preference shares.
Worked solution & mark scheme
This 25-mark question has a full step-by-step worked solution and mark scheme. One marking point: “A revaluation reserve appears when non-current assets are revalued above NBV” …