Grape Ltd acquired all the issued shares of Duck Ltd for $940 000 cash on 1 July 2020.

The following information is available at this acquisition date: The equity of Duck Ltd is provided below:

Share capital Retained earnings General reserve

$495 000 2080000 125 000

All the identifiable assets and liabilities of Duck Ltd were recorded at fair value in the statement of financial position. The company income tax rate is 30%.

The following transactions and events occurred during the year ended 30 June 2021:

1. During the year Grape Ltd sold inventory to Duck Ltd for $55,000 at cost plus 20%. Duck Ltd has sold 10% of these items externally as at 30 June 2021.

2. On 1 April 2021, Duck Ltd sold an item of inventory to Grape Ltd for $28,000. This inventory had cost Duck Ltd $20,000. Grape Ltd treated the item as plant and will depreciate it at 20% p.a.

3. Grape Ltd sold land to Duck Ltd for $25,000 which had originally cost $32,000.

4. Dividends: Duck Ltd paid $18 000 interim dividends in September 2020, and Grape Ltd declared $26 000 dividends in May 2021 (to be paid in October 2021).

5. On 1 July 2020, Grape Ltd provided an office for Duck Ltd’s administrative staff to use. Grape Ltd charges $700 per month. The last rental receipt received by Grape Ltd was on 30 April 2021.

Part (b) Prepare the consolidation entries as at 30 June 2021 in excel using the template below. Include narrations for each entry: (28 marks)

Date Particulars Reference Debit Credit

Part (c): Worksheet (24 marks)

Using excel, prepare the consolidation worksheet as at 30 June 2021, showing all entries including the corrected entries discussed in Part (a). Each entry needs to be entered as a separate amount and not entered as subtotals in the worksheet. Round your answers to zero decimal places. The worksheet template is provided below.

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	Grape	Duck	Ref	Adjustments		Group ($)
	Ltd ($)	Ltd ($)		Debit ($)	Credit ($)
Sales revenue	180,000	131,000
Cost of sales	(88,000)	(58,000)
Gross profit 92,000 73,000
Dividend revenue	24,000	-
Rent revenue	8,400	-
Proceeds from sale of land	-	25,000
Depreciation	(12,000)	(8,000)
Carrying amount of equipment sold	-	(32,000)
Rent expense		(8,400)
Other expenses	(32,000)	(15,000)
Profit before tax	80,400	34,600
Less: Income tax expense	24,120	10,380
Profit after tax for the year	56,280	24,220
Retained earnings (1/7/20)	72,000	280,000
Dividend paid	-	(18,000)
Dividend declared	(26,000)	-
Retained earnings (30/6/21)	102,280	286,220
Share capital	165,000	495,000
General reserve	30,000	125,000
BCVR	-	-
Shareholders’ equity 297,280 906,220

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	Grape	Duck	Ref	Adjustments		Group ($)
	Ltd ($)	Ltd ($)		Debit ($)	Credit ($)
Liabilities
Accounts payable	737,000	38,700
Other Payables	74,120	1,400
Dividend payable	26,000	-
Deferred Tax liability	50,000	11,000
Total liabilities 887,120 51,100
Total liabilities & Equity	1,184,400	957,320
Assets
Cash	25,000	22,600
Accounts receivable	12,000	12,720
Dividend receivable	52,000	-
Other receivables	1,400	12,000
Inventories	45,000	22,000
Investment in Duck Ltd	940,000	-
Land	52,000	84,000
Plant	60,000	78,000
Acc’d depreciation	(38,000)	(26,000)
Buildings	55,000	62,000
Acc’d depreciation	(20,000)	(15,000)
Goodwill	-	25,000
Deferred tax asset	-	680,000
Total assets	1,184,400	957,320

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Part (d): Group financial statements (12 marks)
Using excel, prepare the Statement of Financial position for Grape Ltd as at 30 June 2021.