Background Information:
(a) Record the consolidated journal entries necessary to prepare consolidated accounts for the year ending 30 June 2022 for the group comprising M Ltd and N Ltd (In Sheet 2: Consolidated Journal Entries)
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| 1. Consolidation Adjustments at 30/6/2022 | | | |
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| Accounts | Ref | Dr ($) | Cr ($) |
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| Share Capital | 1 | $1,166,400 | |
| Retained earnings | 2 | $218,700 | |
| Plant replacement reserve | 3 | $291,600 | |
| Goodwill | 4 | $591,760 | |
| BCVR | 5 | $323,540 | |
| Investment in N Ltd | 6 | | $2,592,000 |
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On 1/07/2019 MLtd acquired: 100% of the issued shares of NLtd for: $2,592,000 At the date of acquisition, the Owners' Equity of NLtd consisted of: Share capital $1,166,400 Plant replacement reserve $291,600 Retained earnings $218,700 $1,676,700 As at 30/06/2022 The accounts of the two companies appear as follows: Sales e Cost of Goods Sold Depreciation expense Interest expense Other expenses MLtd $ 4,147,500 2,488,500 207,300 165,900 420,700 NLtd $ 2,089,800 1,358,300 104,400 62,080 67,520 Other Income pils Interest revenue Dividend revenue 93,100 226,800 OO es Income tax expense Net Profit after Tax Retained earnings (01/07/2021) Available for appropriation 355,500 829,500 1,244,100 2,073,600 149,200 348,300 364,500 712,800 Interim dividend paid Final dividend declared Retained earnings (30/06/2022) 194,400 324,000 1,555,200 97,200 129,600 486,000 Share Capital Plant replacement reserve Total Owner's Equity 3,369,600 259,200 5,184,000 1,166,400 291,600 1,944,000 Loan payable (due 30/06/2024) Dividend payable Deferred Tax Liability Other liabilities Total Liabilities 0 324,000 388,800 583,200 1,296,000 388,000 129,600 32,400 98,000 648,000 Total Liabilities & Owner's Equity 6,480,000 2,592,000 Assets Dividend receivable Inventory Property, Plant & Equipment Accumulated depreciation Land Investment in NLtd Loan receivable Other assets Total Assets 129,600 0 907,200 155,500 1,749,600 1,036,800 -699,900 -207,400 1,101,600 1,036,800 2,592,000 0 388,000 0 311,900 570,300 6,480,000 2,592,000 Additional information: a) At date of acquisition, all identifiable net assets of NLtd were recorded at fair value, with the exception of a block of land in the books of NLtd. The block of land had a carrying value of: and a fair value of: $1,036,800 $1,450,000 b) The directors apply the impairment test for goodwill annually. at 30/06/2022 The cumulative goodwill impairment write-downs for prior years totalled: $500,000 1/07/2020 C) An equipment owned by NLtd was sold to MLtd. Cost of the equipment was: Accumulated depreciation of the equipment was: The asset was sold for: MLtd estimated this item had a remaining useful life of: and residual value of: $463,000 $165,000 $414,000 5 $0 years $272,000 d) The opening inventory of MLtd includes unrealised profit of: on inventory transferred from NLtd during the prior financial year. All of this inventory was sold by MLtd to parties external to the 30/06/2022 Group. e) During the current year, MLtd purchased inventory from N Ltd for: This inventory had previously cost NLtd: Percentage of this inventory sold to outsiders by MLtd during the year was: $1,179,000 $471,000 50% f) NLtd borrowed a loan from MLtd amounting to: 30/06/2022 NLtd paid the annual interest for the intra group loan at arate ol $388,000 16% g) During the current year, MLtd paid QLtd, an external party for management fees expense amouning to: $2,000 h) The following are dividends paid and declared by NLtd to M Ltd: Interim dividend paid Final dividend declared 97,200 129,600 i) The tax rate is: 30%
