Analyse the completed worksheet attached for the Galway Group. Using the information provided in the worksheet, prepare an evaluation report, detailing each omission and error. For each error:

1. List the accounts and amounts, which are incorrect for each consolidation adjustment.

2. Explain WHY the entry is incorrect. Include formulas where possible in your explanation.

3. Provide the correct entry that should have been in the worksheet and explain each account and amount for this entry.

4. Explain the overall effect each error or omission will have (in amount) on the Group financial statements if it is not corrected.

 
 

Galway Ltd ($) Dublin Ref Adjustments Dr ($) Ref Ltd ($) Cr ($) Sales revenue 180 000 131 000 25 000 Cost of sales (88 000) (58 000) 22 000 2. Gross profit 92 000 73 000 Dividend revenue 24 000 18 000 4 26 000 Service fee revenue 90 000 90 000 Proceeds from sale 148 000 3 120 000 of equipment Depreciation (12 000) (8 000) 1 000 3 Impairment loss - 1c 5 000 Goodwill (40 000) Carrying amount of equipment sold Service fee expense 118 000 3 (90 000) 90 000 Other expenses (32 000) (15 000) Profit before tax 162 000 68 000 Less: Income tax (48 600) (20 400) 300 2 100 expense Profit for the year Retained earnings (1/7/19) Dividend paid 113 400 47 600 72 000 80 000 1b 80 000 (18 000) 18 000 4 Dividend declared (26,000) 26 000 4 Retained earnings (30/6/20) Share capital 159 400 109 600 165 000 95 000 1b 95 000 General reserve 30 000 25 000 1b 25 000 BCVR 1b 45 000 45,000 la Shareholders' 354 400 229 600 equity Liabilities Accounts payable 37 000 3 000 9 000 Other Payables Dividend payable Deferred Tax 24 600 26 000 4 26 000 50 000 11 000 Liability Total liabilities 137 600 23 000 Total liabilities & 492 000 252 600 Equity