Blake Ltd ($)

Reconciliation of opening and closing

retained earnings

Sales revenue 593,400 Cost of goods sold (399,040) Gross profit 194,360 Dividends revenue from Seven Ltd 63,984

Management fee revenue 22,790 Profit on sale of plant 30,100 Expenses

Administrativeexpenses (26,488) Depreciation (21,070) Management fee expense --- Other expenses (86,946) Profit before tax 176,730 Tax expense (52,890) Profit for the year 123,840 Retained earnings-30 June 2017 274,684

398,524 Dividends paid (118,164) Retained earnings-30 June 2018 280,360

Statements of financial position

Shareholders' equity

Retained earnings 280,360 Share capital 301,000 Current liabilities

Accounts payable 47,042 Tax payable 35,518 Non-current liabilities

Loans 149,210

813,130

Current assets

Accounts receivable 51,084 Inventory 79,120 Non-current assets

Land and buildings 192,640 Plant -at cost 257,871 Accumulated depreciation (73,745) Investment in Seven Ltd 306,160

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Other information

1. Blake Ltd acquired its 80 per cent interest in Seven Ltd on 1 July 2009. At that date the capital and reserves of Seven Ltd were:
2. Share capital $172,000 Retained earnings $146,200 $318,200
3. At the date of acquisition all assets were considered to be fairly valued.
4. The management of Blake Ltd use the partial goodwill method.
5. During the year Blake Ltd made total sales to Seven Ltd of $55,900, while Seven Ltd sold
6. $44,720 in inventory to Blake Ltd.
7. The opening inventory in Blake Ltd as at 1 July 2015 included inventory acquired from Seven Ltd for $36,120 that cost Seven Ltd $30,100 to produce.
8. The closing inventory in Blake Ltd includes inventory acquired from Seven Ltd at a cost of $28,896. This cost Seven Ltd $24,080 to produce.

813,130

Seven Ltd ($)

498,800 (204,680) 294,120 ---

--- ---

(33,282) (48,848) (22,790) (66,220) 122,980 (36,292)

86,688 205,712 292,400

(79,980) 212,420

212,420 172,000

39,818 21,500

99,760 545,498

53,578 24,940

280,360

305,988 (119,368)

545,498

1. The closing inventory of Seven Ltd includes inventory acquired from Blake Ltd at a cost of $10,320. This cost Blake Ltd $8,256 to produce.
2. The management of Blake Ltd believe that goodwill acquired was impaired by $2,580 in the year to 30th June 2018. The balance on the accumulated impairments of goodwill account brought forward was $19,350.
3. On 1 July 2015 Blake Ltd sold an item of plant to Seven Ltd for $99,760 when its carrying value in Blake Ltd's accounts was $69,660 (cost $116,100, accumulated depreciation $46,440). This plant is assessed as having a remaining useful life of six years.
4. Seven Ltd paid $22,790 in management fees to Blake Ltd.
5. The tax rate is 30 per cent.

Need to prepare the consolidation worksheet JOURNAL ENTRIES for the preparation of consolidated financial statements by Blake Ltd at 30 June 2018.

consolidation worksheet is NOT required.

acquisition analysis with a calculation of goodwill, pre- acquisition entries, dividend adjustments, intragroup sales and transfers, and a calculation of the non-controlling interest.