Consolidated worksheet, consolidated financial statements

Task Details: On 1 July 2016, Rock Ltd acquired (ex div.) all of the issued capital of Wallaby Ltd. The recorded equity of Wallaby Ltd at this date consisted of:

Share capital $120 000

General reserve 25 000

Retained earnings 55 000

At 1 July 2016, all the identifiable assets and liabilities of Wallaby Ltd were recorded at fair value except for the following assets:

Carrying amount Fair value

Land $100000 $130000

Inventories 78500 86100

Machinery (cost $86 000) 52000 56000

Vehicles (cost $58 000) 47000 53000

Additionally, Wallaby Ltd's records showed a dividend payable at 1 July 2016 of $8000. This dividend was paid on 31 October 2016. The assets of Wallaby Ltd at acquisition date included goodwill recorded at $15 000 arising from a business combination transaction in 2012.

At 1 July 2016, Wallaby Ltd owned but had not recorded an internally generated brand name. This brand name was considered by Rock Ltd to have a fair value of $29 000 and an indefinite useful life. An impairment test conducted with respect to the brand name on 30 June 2019 concluded that its recoverable amount at that date was $2000 less than its carrying amount.

The vehicles and machinery were expected to have a further useful life of 6 and 8 years respectively, with benefits to be received evenly over those periods. Inventory on hand at 1 July 2016 was all sold by 31 January 2017. The land owned at 1 July 2016 was sold in September 2017 for $150 000. The machinery on hand at 1 July 2016 was sold on 1 January 2019 for $38 000.

Adjustments for the differences between carrying amounts and fair values of assets and liabilities on hand at acquisition date are recognised on consolidation. When assets are sold or derecognised, any related valuation reserves are transferred to retained earnings.

In June 2018, Wallaby Ltd paid a share dividend worth $20 000 from the general reserve on hand at 1 July 2016.

The trial balances of both companies at 30 June 2019 showed the following balances:

Rock Ltd Wallaby Ltd

Debit balances

Cash $ 2 500 $ 1 250

Receivables 27 000 13000

Inventories 39 700 24 500

Other current assets 15200 8 200

Deferred tax assets 7 500 3 500

Vehicles 88 000 158 000

Equipment 42 000

Land 140 000 180 000

Financial assets 68 000 14 800

Goodwill 28 000 15 000

Shares in Wallaby Ltd 250 000

Debentures in Rock Ltd 25 000

Dividend paid 10000 5 000

Dividend declared 20 000 12 000

Transfer to general reserve 10000 5 000

Cost of sales 210 000 192 550

Income tax expense 30 000 32 000

Depreciation and other expenses 39 000 36 000

Carrying amount of machinery sold 30 500

Carrying amount of equipment sold 21 000 _

Total $1 005 900 $798 300

Credit balances

Share capital $ 200 000 $140 000

General reserve 35 000 10000

Retained earnings (1/7/18) 51 300 67 500

Accounts payable 69 500 36 000

Loan payable (due 30/6/23) 25 000 15 000

Dividend payable 20 000 12 000

Provisions 12 500 9 300

Current tax liability 43 000 34 000

Deferred tax liability 11 800 5 000

Accumulated depreciation vehicles 16 400 60 000

Accumulated depreciation equipment 34 500

8% Debentures (matures 30/6/22) 25 000

Sales revenue 450 000 320 000

Dividend revenue 17 000

Other income 11 400 17 000

Proceeds on sale of equipment 18000

Proceeds on sale of machinery _ 38 000

Total $1 005 900 $798 300

Required: Prepare the consolidation worksheet journal entries for the preparation of the consolidated financial statements of Rock Ltd at 30 June 2019.

Interpretation and representation 20%

Calculations 50%

Analysis 10%

Assumptions 10%

Communication 10%

Total mark will be scaled to a mark out of 30 subject marks