>INSTRUCTIONS
tab of the spreadsheet
Data /2X1 2
00,000
0,850
Touch-U in Subsidiary is
70
4 sold inventory to at a price of
,700
,700
,400
,400
During the current financial year Subsidiary Ltd sold inventory to Parent Ltd at a price of 54 impairment
of the plant-hard at the time of intra-group transaction is
$26,700 10 5 30 iteria
63 4 10 14 5 12 21 30 30 8 Parent Ltd Subsidiary Ltd Dr Dr Dr Dr Dr Dr Dr Ref No Cr Cr Cr Cr Cr Cr Cr Cr $95,000 $0 —beginning of year
paid
-$30,000 -$40,000 Parent Ltd Subsidiary Ltd Consolidation adjustments Ref No Dr Dr Dr Dr Dr Dr Dr Dr Ref No Cr Cr Cr Cr Cr Cr Cr Cr Shareholders’ equity $0 Current liabilities $30,000 $50,000 $40,000 $10,000 $50,000 $0 Non-current liabilities .00
Current assets $25,000 $175,000 $0 $8,000 $800,000 0 Non-current assets $0 $0 $0 $2,000,000 $5,770,000 $2,605,000 $8,375,000 Debit $ Credit $ Debit $ Credit $ Debit $ Credit $ Debit $ Credit $ Debit $ Credit $ Debit $ Credit $ Debit $ Credit $ Debit $ Credit $ Debit $ Credit $ Debit $ Credit $ Debit $ Credit $ Credit $ Credit $ in previous period
Total 0.00 Credit $ Total 0.00 Credit $ 0.002
QUESTION
The marking criteria is shown on the
Data
Question requires you to complete necessary journal entries, non controlling interest calculations, complete the spreadsheet adustments, prepare the consolidated income statement, balance sheet, and changes in statement of equity.
ASSIGNMENT AIDS
DATA
item
Aspect
Event
1
Acquisiton of Subsidiary by Parent
Acquisiton date of Subsidiary by the Parent
1/
0
7
8
2
% ownership of Parent in Subsidiary
6
3
Subsidiary Share Capital at acquisition date
$1,
5
4
Subsidiary Retained Earnings at acquisition date
$
30
5
Fair value adjustment at acquisition date
At acquisiton date, the fair value of
Plant
$1,670
6
Cost of Plant Touch-U is
$1,370
7
At acquisition date, accumulated Depreciation of Plant Touch-U
$
9
8
At acquision date, the remaining useful life in years of Plant Touch U
9
Intra-group service transaction
Subsidiary pays management fees to Parent during the financial year. This item is included in ‘other’ income and expenses
$5,850
10
Intra-group inventory transaction:
Parent sell inventory (Type-High) to subsidiary in current periodDuring the current financial year
Parent Ltd
Subsidiary Ltd
$
26
11
The inventory cost Parent to produce
$
18
12
% of this inventory is still on hand with Subsidiary Ltd at the end of the financial year.
54
13
Intra-group inventory transaction:
Subsidiary sell inventory (Type-Low) to Parent in current period
During the current financial year Subsidiary Ltd sold inventory to Parent Ltd at a price of
23
14
The inventory cost Subsidiary to produce
$
17
15
% of this inventory is still on hand with Parent Ltd at the end of the financial year.
44
16
Intra-group inventory transaction: Subsidiary sell inventory (Type Rich) to Parent in previous period brought into the current period
$14,400
17 The inventory cost Subsidiary to produce
$11,400
18
% of this inventory is still on hand with Parent Ltd at beginning of the financial year
19
Goodwill
Parent Ltd Management believes goodwill has impaired in the previous years by
$16,600
20
Parent Ltd Management believes goodwill has further impaired in the current period years by
$6,600
21
Intra-group depreciable non-current asset (Plant-Steel-Ball) transaction:
Subsidiary sell non current asset to Parent in current periodBeginnig of the current year, Subsidiary Ltd sold an item of plant-hard to Parent Ltd for a price of
$46,700
22
Cost of the plant-hard at the time of intra-group transaction is
$51,700
23
Accumulated depreciation
24
Remaining useful life of the plant-hard at the time of sale with no expected residual value, in years
25
Intra-group depreciable non-current asset (Plant-Aluminium-Spade) transaction:
Parent sell non current asset to Subsidiary in previous periodBeginnig of the previous year, Parent Ltd sold an item of plant-happy to Subsidiary Ltd for a price of
46,900
26
Cost of that item of plant-happy at the time of intra-group transaction is
$51,900
27
Accumulated depreciation of the plant-happy at the time of intra-group transaction is
$26,900
28
Remaining useful life of the plant-happy at the time of sale with no expected residual value, in years
29
Income tax rate as % is
30
Note
The management of Parent Ltd values any non-controlling interest in Subsidiary Ltd at fair value
Marking
Cr
Category
Marks
Correctly completing consolidation journal entries
63
Linking each journal item to the adjustment columns on the group financial statements
Non controlling inerest at the date of acquisition
Non controlling inerest from the date of acquisition to the beginning of the period
Non controlling intereest during the current period
Summay table completion of non controlling interest
Group income statement
Group balance sheet
Journal reference number in the Group income statement reference columns
Journal reference number in the Group balance sheet reference columns
Group statemet of changes in equity
Total
260
Weighted to
30%
OUTPUT
Detailed reconciliation of opening and closing retained earnings
Consolidation adjustments
Consolidated entity
Ref No
Dr
Sales revenue
$480,000
$115,000
$595,000
Cost of goods sold
-$100,000
–
$40,000
-$140,000
Other expenses
-$80,000
-$15,000
–
$95,000
Goodwill impairment expense
$0
Other revenue
$70,000
$25,000
Gain on bargain purchase
Profit before tax
$370,000
$85,000
$455,000
Tax expense
-$60,000
–
$30,000
-$90,000
Profit for the year
$310,000
$55,000
$365,000
Retained earnings
$1,000,000
$800,000
$1,800,000
Retained earnings available for distribution
$1,310,000
$855,000
$2,165,000
Dividends
-$160,000
-$190,000
Dividend declared
–
$10,000
–
$50,000
Retained earnings—30 June 2X20
$1,110,000
$815,000
$1,925,000
Statement of financial position
Consoiidated entity
Shareholders’ equity
Revaluation and other reserves
Retained earnings $1,110,000 $815,000 $1,925,000
Share capital
$4,000,000
$1,500,000
$5,500,000
Current liabilities
Accounts payable
$20,000
Dividends payable
Deferred tax liability
Non-current liabilities
Loans
$600,000
$250,000
$850,000
Deferred tax liability 0
Total of liabilities and equity
$5,770,000
$2,605,000
$8,375,000
Current assets
Cash
$150,000
$175,000
Accounts receivable
$242,000
$417,000
Dividends receivable
$8,000
Inventory
$500,000
$300,000
Deferred tax asset
Non-current assets
Land
$1,400,000
$1,105,000
$2,505,000
Plant
$1,870,000
$1,300,000
$3,170,000
Accumulated depreciation
-$400,000
-$300,000
-$700,000
Deferred tax asset $0
Goodwill on acquistion
Accumulated goodwill impairment
Investment in Subsidiary Ltd
$2,000,000
Total assets
0.00
Statement of Changes in Equity
Description
Share capital $
Retained earnings $
Reserves $
Group $
Balance at 1 July 2019
Total comprehensive income for the year
Dividends
Balance at 30 June 2020
Ref No
Dr/Cr
Consolidation journal account name
1
Consolidation journal entries for the fair value adjustment of the Plant-Touch U in Subsidiary Ltd and the resulted tax effect
Debit $
Credit $
2
Consolidation journal entries relating to pre-tax depreciation entry resulting because of fair value adjustment of the Plant-Touch-U asset
3
Consolidation journal entries relating to tax effect result from the depreciation entry resulting because of fair value adjustment of the Plant-Touch-U to prepare group accounts for the current year
4
Consolidation journal entries for the elimination of Parent Ltd’s investment in Subsidiary Ltd
5
Consolidation journal entries relating to the management fees for the current year
6
Consolidation journal entries relating intra-group inventory-Type High transactions and its tax effects
7
Consolidation journal entries relating intra-group inventory-Type Low transactions and its tax effects
8
Consolidation journal entries relating intra-group inventory (coming from the previous period)-Type Rich transactions and its tax effects
9
Consolidation journal entries relating to impairment of goodwill.
10
Consolidation journal entries relating intra-group plant-Steel-Ball transactions and its tax effects
11
Consolidation journal entries relating intra-group Plant-Aluminium-Spade transactions and its tax effects
12
Consolidation journal entries relating to intra-group dividends.
13
Itemise and show the non-controlling interests in Subsidiary Ltd on acquisition date
Share capital
Retained earnings
Revaluation surplus
Goodwill
Total 0.00
14
Itemise and show the non-controlling interest movements in share capital and reserves between the acquisition date and beginning of the current financial year
Increase in retained earnings from acquisition date to beginning of year
Additional depreciation expense due to revaluation of Plant Touch-U
Additional income tax expense due to previous period depreciation expense from revaluation of Plant Touch-U
Previous period intra-group cost of sale of Type-Rich inventory
Previous period intra-group cost of sale of Type-Rich inventory – income tax
Impairment expense of goodwill
Previous period intra-group gain on sale of Plant Aluminum-Spade
Previous period intra-group gain on sale of Plant Aluminum-Spade – income tax
Additional depreciation expense due to previous period intra-group sale of Plant Aluminum-Spade
Additional income tax expense due to previous period depreciation expense from intra-group sale of Plant Aluminum-Spade
15
Itemise and show the non-controlling interests of the Parent Ltd Group for the current financial year
Profit after tax for the year
Depreciation expense from revaluation of Plant Touch-U
Income tax expense from depreciation expense of revaluation of Plant Touch-U
Intra-group cost of sale of Type-Low inventory
Intra-group cost of sale of Type-Low inventory – income tax
Intra-group cost of sale of Type-Rich inventory
Intra-group cost of sale of Type-Rich inventory – income tax
Impairment expense of goodwill
Intra-group gain on sale of Plant Steel-Ball
Intra-group gain on sale of Plant Steel-Ball – income tax
Depreciation expense from intra-group sale of Plant Steel-Ball
Income tax expense from depreciation expense of intra-group sale of Plant Steel-Ball
Depreciation expense from intra-group sale of Plant Aluminum-Spade
Income tax expense from depreciation expense of intra-group sale of Plant Aluminum-Spade
16
Comppute the total non-controlling interest (NCI
NCI at acquisition
NCI from acquisition to beginning of year
NCI during the year
Interim dividend
Final dividend
Total NCI in the group