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Consolidation worksheet, consolidated financial statements On 1 July 2018, Ghostbusters Ltd acquired all the shares of Bat Ltd for $305 000 on an ex-div .

Consolidation worksheet, consolidated financial statements

On 1 July 2018, Ghostbusters Ltd acquired all the shares of Bat Ltd for $305 000 on an ex-div. basis. On this date, the equity and liabilities of Bat Ltd included the following balances:

At acquisition date, all the identifiable assets and liabilities of Bat Ltd were recorded at

amounts equal to fair value except for:

Goodwill was not impaired in any period. The plant and equipment had a further 5-year life at acquisition date and was expected to be used evenly over that time. The trademark was considered to have an indefinite life. The machinery, which was estimated to have a further 4-year life at acquisition date, was sold on 1 January 2020. Any adjustments for differences between carrying amounts at acquisition date and fair values are made on consolidation.

During the year ended 30 June 2019, all inventories on hand at acquisition date were sold, and the land was sold on 1 June 2020. Any valuation reserves created are transferred on consolidation to retained earnings when assets are sold or fully consumed.

Additional information

Of the interim dividend paid by Bat Ltd in the current year, $5000 was from profits before acquisition date. All other dividends were from current year profits. Shareholder approval is not required in relation to dividends.

On 1 July 2019, Bat Ltd has on hand inventory worth $12 000, being transferred from Ghostbusters Ltd in June 2019. The inventory had previously cost Ghostbusters Ltd $8000. On 31 March 2020, Bat Ltd transferred an item of plant with a carrying amount of $10 000 to Ghost Ltd for $15 000. Ghostbusters Ltd treated this item as inventory. The item was still on hand at the end of the year. Bat Ltd applied a 20% depreciation rate to this plant.

On 1 January 2020, Bat Ltd acquired $8000 inventory from Ghostbusters Ltd. This inventory originally cost Ghostbusters Ltd $5000. The profit in inventory on hand at 30 June 2020 was $1000.

During the year ending 30 June 2020, Bat Ltd sold inventory costing $12 000 to Ghostbusters Ltd for $18 000. Two-thirds of this was sold to external parties for $9000.

On 1 January 2019, Ghostbusters Ltd sold furniture to Bat Ltd for $8000. This had originally cost Ghostbusters Ltd $12 000 and had a carrying amount at the time of sale of $7000. Both entities charge depreciation at a rate of 10% p.a.

Ghostbusters Ltd sold some land to Bat Ltd in December 2019. The land had originally cost Ghostbusters Ltd $25 000, but was sold to Bat Ltd for only $20 000. To help Bat Ltd pay for the land, Ghostbusters Ltd gave Bat Ltd an interest-free loan of $12 000. Bat Ltd has as yet made no repayments on the loan.

The tax rate is 30%.

On 30 June 2020 the trial balances of Ghostbusters Ltd (Ghost) and Bat Ltd were as follows:

Required

Prepare the consolidation journal / worksheet entries for Ghostbusters Ltd for 30/6/2020. (15 marks)

Update and complete the consolidation worksheet for 30/6/2020.(15 marks) Use the worksheet provided below

Financial Statements

Ghost

Ltd

Bat

Ltd

Adjustments

Group

Dr

Cr

Sales revenue

220 000

182 000

Other income

62 000

20 000

282 000

202 000

Cost of sales

162 000

128 000

Other expenses

53 000

41 000

215 000

169 000

Trading profit

67 000

33 000

Gains/losses on sale of non-current assets

22 000

25 000

Profit before tax

89 000

58 000

Tax expense

20 000

18 000

Profit

69 000

40 000

Retained earnings

(1/7/19)

30 000

45 000

Transfer from BCV reserve

0

0

99 000

85 000

Dividend paid

12 000

10 000

Dividend declared

6 000

4 000

18 000

14 000

Retained earnings

(30/6/20)

81 000

71 000

Share capital

312 000

200 000

General reserve

20 000

25 000

BCVR

-

-

Total Equity

413 000

296 000

Deferred tax liabilities

-

-

Dividend payable

6 000

4 000

Current tax liability

8 000

2 500

Loan from Ghost Ltd

-

12 000

Provisions

78 000

169 500

Total Liabilities

92 000

188 000

Total Liabilities + Equity

505 000

484 000

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