Accounting 9706 · AS & A Level · Business acquisition and merger

Business acquisition and merger — practice question

Jack and Paul were two sole traders. On 1 July 2018, they chose to combine their businesses and set up a partnership. Their statements of financial position on 30 June 2018 were as follows.
(a)[3]

Calculate the total goodwill arising from the merger terms.

(b)[10]

Prepare the partnership’s statement of financial position at 1 July 2018.

(c)[5]

Prepare the current account for each partner for the year ended 30 June 2019.

(d)[2]

Calculate, to two decimal places, the return on capital employed (ROCE) for the year ended 30 June 2019.

(e)[5]

Evaluate whether Jack and Paul have gained financially from merging their businesses. Support your response with reasons.

Worked solution & mark scheme

This 25-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Combined goodwill is $30 090” …

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