1:34 4 ACCT6005 Company accounting Assessment 3 Case study Part A 5G Assignment instructions: This assignment is to be completed using Excel. Please ensure that your file name contains your student ID and your full name. Please use a separate sheet within the one file for each assignment part (a), (b) (c) and (d). Please ensure that you use a 'Ref' column in the worksheet to identify each individual consolidation entry. Case study: On 1 July 2020, Bowie Ltd acquired all the shares of David Ltd for $500,000 on an ex-div. basis. On this date, the equity and liabilities of David Ltd included the following balances: Share capital General reserve Retained earnings $100,000 25,000 145,000 Dividend Payable-ex div basis 8,000 At acquisition date, all the identifiable assets and liabilities of David Ltd were recorded at amounts equal to fair value except for: Carrying amount Fair value Useful life at acquisition date Land 700,000 900,000 Sold 30/4/2022 Plant and equipment $400,000 $404,000 5 years (cost $500,000) Trade mark 50,000 60,000 Indefinite life Motor vehicle (cost $90,000) 60,000 75,000 5 years Inventories 2,000 12,000 100% sold externally during the year ended 30/6/2021 Any valuation reserves created are transferred on consolidation to retained earnings when assets are sold or fully consumed. (Continued on next page) Additional information (a) On 1 July 2021, Bowie Ltd has on hand inventory worth $34 000, being transferred from David Ltd in June 2021. The inventory had previously cost David Ltd $30 000. (b) On 1 January 2022, David Ltd sold an item of plant with a carrying amount of $115 000 to Bowie Ltd for $125 000. Bowie Ltd treated this item as inventory. The item was still on hand at the end of the year. David Ltd applied a 20% depreciation rate to this plant. (c) On 1 March 2022, David Ltd acquired $9 000 inventory from Bowie Ltd. This inventory originally cost Bowie Ltd $5 000. 25% of this inventory has been sold to external parties for $35,000. (d) On 1 January 2021, Bowie Ltd sold office equipment to David Ltd for $2,000. This office equipment had originally cost Bowie Ltd $5 000 and had a carrying amount at the time of sale of $1,000. Both entities charge depreciation at a rate of 20% p.a. (e) On June 2021 Bowie Ltd gave David Ltd a loan of $425 000. David Ltd has not made any repayments on the loan. Interest is charged at 15% per annum on the loan and the last interest payment was made on 31 March 2022. Both companies have recorded accruals at year end. The corporate tax rate is 30%. Required: Prepare the acquisition analysis as at 1 July 2020 for the Bowie Ltd Group. (8 marks) b. Prepare the consolidation worksheet entries as at 30 June 2022 for the Bowie Ltd Group. (67 marks) Prepare the consolidation worksheet for the Bowie Ltd Group as at 30 June 2022, using the attached template. (10 marks) d. Prepare a consolidated Balance sheet using account format, for the Bowie Ltd Group as at 30 June 2022. Please ensure all sub-headings and sub-totals are included.(15 marks) Round all amounts to 2 decimal places. Part A: Total marks = 100 Weighted total marks = 40 Financial data As at 30/6/2022 Bowie David Ltd (S) Ltd (S) REF Debit (S) REF Credit (S) Sales revenue 220,000 212,000 Dividend income 62,000 20,000 Interest income 63,750 345,750 232,000 Cost of sales 162,000 128,000 Interest expense 63,750 Other expenses (including 83,000 71,000 depreciation) Total expenses 245,000 262,750 Trading profit 100,750 (30,750) Gains/losses on sale of non- 22,000 225,000 current assets Profit before tax 122,750 194,250 Tax expense 36,825 58,275 Profit after tax 85,925 135,975 Bowie Ltd Group(S) Financial data As at 30/6/2022 Bowie David Bowie Ltd Group (S) Ltd (S) Ltd (S) REF Debit (S) REF Credit (S) Retained earnings 30,000 355,000 (1/7/21) Transfer from BCVR reserve Dividend paid 12,000 7,000 Dividend declared 6,000 14,000 Retained earnings 97,925 469,975 30/6/2022 Share capital 966,088 100,000 General reserve 20,000 25,000 BCVR Total Equity 1,084,013 594,975 Financial data Bowie As at 30/6/2022 David Bowie Ltd Group ($) Ltd (S) Ltd (S) REF Debit ($) REF Credit ($) Liabilities: Deferred tax liabilities Interest Payable 15,938 Dividend payable 20,000 14,000 Current tax liability 322,000 102,500 Loan from Bowie Ltd 425,000 Accounts Payable 196,925 246,900 Total Liabilities 538,925 804,338 Total Liabilities + Equity 1,622,938 1,399,313 Financial data Bowie As at 30/6/2022 David Bowie Ltd Group (S) Ltd (S) Ltd (S) REF Debit (S) REF Credit (S) Assets: Shares in David Ltd 500,000 Cash 7,800 35,000 Inventories 20,000 50,000 Dividend Receivable 14,000 3,000 Interest Receivable 15,938 Accounts Receivable 6,000 32,225 Land 525,000 700,000 Plant & equipment 113,000 500,000 Accumulated depreciation- (34,000) (100,000) Plant Motor vehicle 15,000 90,000 Accumulated depreciation- (1,000) (30,000) Motor vehicle Office equipment 7,000 8,000 Accum. depreciation- (1,000) (2,000) office equipment Trademark 50,000 Goodwill 5,000 Deferred tax assets 10,200 58,088 Loan to David Ltd 425,000 Total assets 1,622,938 1,399,313