1  On 1 July 2015 when Parent acquired 100% of the Subsidiary that led to the business combination, all of the assets acquired and liabilities assumed were valued at fair value except land that had a carrying value of 270,000 and fair value of 320,000

1 

Carrying Amount of Land = 270,000

Fair value of Land = 320,000

During the consolidation asset to be valued and recognised at Fair Value hence we need to revalued the land from carrying amount to fair value

Revaluation Surplus = Fair value of Land - Carrying Amount of Land = 320,000 - 270,000 = 50,000

We also need to give effect of income tax in consolidation because the effect of income tax has to be recognized on Fair Value of Asset i.e. revaluation adjustment.

Deferred Tax Liability = Revaluation Surplus * Tax Rate = 50,000 = 15,000

In short,

Land to be revalued to 320,000 from 270,000 hence Land price need to be increased by 50,000, For this Land account need to be debited by 50,000.

Revaluation Surplus need to created by 50,000 hence Revaluation surplus need to be increased by 50,000, For this Revaluation Reserve account need to be credited by 50,000.

We need to create of Deferred tax Liability Account by debiting Revaluation Surplus account for giving effect of income tax, For this Deferred tax Liability Account need to be credited by 15,000 & Revaluation Reserve need to be debited by 15,000.

Final Entry:-

Dr Land 50,000

Cr Revaluation surplus 50,000

Dr Revaluation surplus 15,000

Cr Deferred tax liability 15,000

Answer : Option B is correct i.e. Dr Land 50,000 Cr Revaluation surplus 50,000 Dr Revaluation surplus 15,000 Cr Deferred tax liability 15,000

2 

1. Revenues Budget
2. Production Budget
3. Direct materials costs budget
4. Budgeted Income Statement