Hi, Can i please have help with part c? I have uploaded my work and I am having trouble with the bcvr entries in part c. It is consolidation for corporate accounting
ACCI'ZZDI GROUP CASE STUDY SEMESTER 2 2019 On 1 July 2013 Donald Ltd acquired all of the share capital (cum div) of Duck Limited for a consideration of $500,000 cash and a brand that was held in their accounts at a book value of $10,000 but at 1 July 2013 had a fair value of $34,000. Duck Ltd reported a dividend payable of $10,000 at 1 July 2013. At that date all the identiable assets and liabilities were recorded at fair value with the exception of: ASSET BOOK VALUE MARKET VALUE Inventory $10,000 $14000 Land $25,000 $30,000 Plant $20,000 Less depreciation 13 0001 $17,000 $22,000 Accounts Receivable $16,000 $14,000 The inventory was all sold by 30/6/14. The remaining useful life of the plant is 5 years. The accounts receivable were collected by 30/6/14 for $14,000. The land was sold on 30/12/16 for $32,000. The plant was on hand still at 30/6/17. At the date of acquisition the equity of Duck Ltd consisted of: Share Capital General Reserve Retained Earnings Information from the trial balances of Donald Ltd and Duck Ltd at 30 June 2017 is presented overleaf on page 3. Additional Information 1. 0n 1 Jan 2017 Duck Ltd sold inventory to Donald Ltd costing $60,000 for $80,000. Half of this inventory was sold to outside parties for $30,000 by 30/6/17. 2. 0n 1 Jan 2016 Duck Ltd sold inventory costing $5000 to Donald Ltd for $12,000. Donald Ltd treats the item as equipment and depreciates it at 10% per annum. 3. 0n 1 July 2016 Duck sold plant to Donald for $12,000. The plant had cost Duck $10,000 on 1 July 2014 and it was being depreciated at 10% per annum. Donald regards the plant as inventory. The inventory was all sold by 30th July 1016. 4. At 1 July 2016 Duck Ltd held inventory that it had purchased from Donald Ltd on 1 June 2016 at a profit of 57000. All invento was sold b 30 June 2017. 5. Donald Ltd accrues dividends fro are declared 6. Donald Ltd has earned $1200 in in Page 1 0f 3 e 2017 nancial year from Duck Ltd. 7. Donald Ltd has earned $4800 in service revenue in the 2017 financial year from Duck Ltd. 8. Assume a tax rate of 30%. Required Donald Ltd Duck Ltd A. Prepare the acquisition analysis at 1 July 2013. OR CR DR B. Prepare the BCVR and pre-acquisition journal entries at 1 July 2013. Sales Revenue CR 1,192,500 932,500 C. Prepare the BCVR and pre-acquisition journal entries at 30 June 2017. Cost of Sales 388,00 676,00 . Prepare the consolidation worksheet journal entries to eliminate the effects of Wages and Salaries 61,00 Inter-entity transactions as at 30 June 2017 Depreciation Expense 32,000 E. Prepare the consolidation worksheet for the preparation of the consolidated financial Service Expense 5,200 Interest Expense 3,500 4,800 7,000 1,800 statements for the period ended 30 June 2017. 1,200 F. Prepare the consolidated statement of profit or loss and other comprehensive income, Other Expenses 4,000 6,000 the consolidated balance sheet and the consolidated statement of changes in equity for Gain on Sale of Non Current Asse ,000 the period ended 30 June 2017 Service Revenue 4,800 Interest Revenue 5,000 1,200 Presentation Dividend Revenue 7,000 Income tax expense 16,000 Your work should be prepared using an Excel spreadsheet and saved as a PDF to be 97,120 submitted via LMS by the du Retained Earnings 1/7/16 118,480 100,820 Dividend Paid 70,280 10,000 Dividend Declared 7,000 12,000 9,000 Share Capital 500,000 General Reserve 380,000 Other Equity 1/7/16 146,000 4,000 0,000 Gains on Financial Assets (OCI) 12,000 ,000 Loan Payable to Donald Ltd 6,000 Deferred Tax Liability 52,00 16,000 Dividend Payable 30,000 12,000 Shares in Duck Lto 9,000 524,000 Cash 86,000 Inventories 47,500 169,500 36,000 Other Current Assets Dividend Receivable 11,000 9,000 00,000 Loan receivable from Duck Ltd 16,000 Financial Assets 15,000 Plant and Equipment 68,000 52,000 Acc. Depreciation Plant 28,000 LO,000 Land 70,000 14,000 120,000 2,040,320 2,040,320 1,558,780 1,558,780 N 3AutoSave O OFF ~ 7 6 5 - 3 Corporate-Accounting-Group-Assignment-Draft-1 - Saved to my Mac Q ~ Search Sheet Home Insert Draw Page Layout Formulas Data Review View Share Comments Calibri (Body) v 12 A Wrap Text v General Insert v x Delete Ex AY- O. Paste BIUV V VAv E Merge & Centre v $ ~ % " 00 20 Conditional Format Cell Format v X v Sort & Find & Ideas Sensitivity Formatting as Table Styles Filter Select A15 fx A B C D E F G H I J K L M N 0 P Q R S T U V w Acquisition Analysis Net fair value of identifiable $380,000.00 + $70,000.00 + $62,000.00 (equity) assets and liability of Duck Ltd $2,800.00 (BCVR- Inventories) $3,500.00 (BCVR-Land) $3,500.00 (BCVR- Plant $1,400.00 (Accounts Receivable) $520,400.00 10 11 Consideration transferred = $500,000.00 - $10,000.00 + $34,000.00 12 $524,000.00 13 14 Goodwill $524,000.00 - $520,400.00 15 $3,600.00 16 17 18 19 20 21 26 a) b) C) d) e) f) + + 100%AutoSave O OFF ~ 7 6 5 = 3 Corporate-Accounting-Group-Assignment-Draft-1 - Saved to my Mac Q ~ Search Sheet Home Insert Draw Page Layout Formulas Data Review View Share Comments Calibri (Body) v 12 A Insert v = Wrap Text v General x Delete Ex AY- O. v Z Paste BIUV V VAv E = Merge & Centre v $ ~ % 9 Conditional Format Cell X v Sort & Find & Ideas Sensitivity Formatting as Table Styles Format v Filter Select F38 fx A B C E F G H I J K L M N O P Q R S T U BCVR Entries as at 1 July 2013 1.Inventory Dr $4,000 Deferred Tax Liability (DTL) Cr $1,200 BCVR cr $2,80 D 00 2.Land Dr $5,000 Deferred Tax Liability (DTL) Cr $1,50 10 BCVR $3,500 11 12 3.Accumulated Depreciation Dr $3,000 13 Plant Cr $3,00 14 15 4.Plant Dr $5,000 16 Deferred Tax Liability (DTL) Cr $1,50 17 BCVR $3,500 18 19 5.Deferred Tax Asset (DTA) Dr $600 20 BCVR Dr $1,400 21 Accounts Receivable cr $2,00 22 23 6.Goodwill Dr $3,600.00 24 BCVF Cr $3,600.00 25 26 Pre-acquisition entry 1 July 2013 27 28 Retained earnings $62,000 29 Share capital $380,000 30 General Reserve Dr $70,000 31 BCVR $12,000 32 Shares in Duck Li $524,000 33 34 35 36 37 38 39 40 41 a ) b) C) d) e) f) + + 100%AutoSave O OFF ~ 7 6 5= Corporate-Accounting-Group-Assignment-Draft-1 Q ~ Search Sheet Home Insert Draw Page Layout Formulas Data Review View Share Comments Calibri (Body) v 12 A Wrap Text General Insert v Ex AY- O. Paste BIU TV VAV E Ex Delete Merge & Centre v $ ~ % 9 00 20 Conditional Format Cell Formatting as Table Styles Format v XV Sort & Find & Ideas Sensitivity Filter Select G15 X V fx D E F G H M N o Q R U V w Y Z AA AB BCVR Journal Entries at 30 June 2017 1.Cost of Sales Deferred Tax Liability (DTL) Cr Dr $4,000 $1,200 Transfer from BCVR $2,800 2.Accumulated Depreciation Dr $3,000 Plant $3,000 10 3.Plant Dr $5,000 11 Deferred Tax Liability (DTL) Cr $1,500 12 BCVR $3,500 13 4 4.Depreciation Expense Dr $1,00 15 Retained Earnings Dr $3,000 16 Accumulated Depreciation $4,000 17 18 5.Deferred Tax Liability (DTL) or $1,200 19 Interest Tax Expense (ITE) $300 20 Retained Earnings 900 21 22 6.Gain on Sale T $5,000 23 Interest Tax Expense (ITE) $1,50 24 Transfer from BCVR $3,500 25 26 7. Dr $3,500 27 BCVR Cr $3,500 28 29 8. Goodwill Dr $3,600.00 30 BCVR $3,600.00 31/ 32 Pre-acquisition Entries 30 June 2017 33 9.Retained Earnings Dr $59,200 34 Share Capital r $380,000 35 General Reserve r $70,000 36 BCVR 37 Shares in Duck Limited Dr $14,800 $524,000 38 39 40 41 42 43 44 45 46 47 48 49 a ) b) C) d) e) f) + + 75%
