Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

i.At 1 July 2011, all the identifiable assets and liabilities of Summer Ltd were recorded at fair value except for the following assets: Carrying amount

image text in transcribed

i.At 1 July 2011, all the identifiable assets and liabilities of Summer Ltd were recorded at fair value except for the following assets:

Carrying amount

Fair value

Land

$62,000

$80,000

Machinery (cost 135,000)

105,000

120,000

Receivable

42,000

36,000

The machinery has an expected life of 10 years, with benefits being received evenly over that period. Differences between carrying amounts and fair values are adjusted on consolidation. The land on hand at 1 July 2011 was sold on 1 March 2013 for $84,000. Any valuation reserve in relation to the land is transferred on consolidation to retained earnings. By 30 June 2012, receivables had all been collected.

ii.Perth Ltd uses the full goodwill method. The fair value of the non-controlling interest at 1 July 2011 was $66,000.

iii.Opening inventory of Summer Ltd includes unrealised profit of $5,000 on inventory sold by Perth Ltd. It was all sold by Summer Ltd during the year.

iv.During the year, intragroup sales by Summer Ltd to Perth Ltd were $80,000.The mark-up on cost of all sales was 25%. At 30 June 2016, Perth Ltds inventory included $35,000 of items acquired from Summer Ltd.

v.On 1 January 2016, Summer Ltd sold an item of inventory to Perth Ltd for $18,000 at a profit before tax of $3000. Perth Ltd had treated this item as an addition to its machinery and depreciated at 10% p.a. straight-line.

vi.On 1 April 2016, Perth Ltd sold $15,000 worth of inventory to Summer Ltd. The cost of this inventory was $9000. By 30 June 2016, Summer Ltd had sold 60% of the inventory to outside entities.

vii.Some of the items manufactured by Summer Ltd are used as machinery by Perth Ltd. One of the machinery items held by Perth Ltd at 30 June 2016 was purchased from Summer Ltd on 1 January 2015. It had cost Summer Ltd $17,500 to manufacture this item and was sold to Perth Ltd for $25,000. Perth Ltd depreciates such items at 10% p.a. on cost.

viii.Management fees derived by Perth Ltd were all from Summer Ltd and represented charges made for administration.

ix.The tax rate is 30%.

Prepare the consolidation journal entries

Note: Consolidation worksheet and all calculation should be presented in the same format as used in Leo, Hoggett and Sweeting, 10ed textbook.

image text in transcribed 2103AFE Company Accounting Group Assignment Trimester 1, 2017 This assignment requires students to prepare consolidated financial statements in accordance with appropriate Australian Accounting Standards and Corporate Legislation. DUE DATES: Assignment: SPARK ratings: 5.00pm Friday 19th May 2017 5:00pm Friday 2nd June 2017 TOTAL WEIGHTING: 20% This is calculated as follow: Part A (by GROUP): 10% - Group mark multiplied by SPA factor* Part B (by INDIVIDUAL): 10% - Individual mark *A group mark will be allocated for technical content OUT OF 10%. This will be adjusted for each student using the SPA factor generated by SPARK. An adjusted mark will be calculated for each individual student; therefore, each member of the group may receive a different fnal assessment percentage. SPARK ratings will be included in relation to the individual mark awarded for Group Assignment only. REQUIREMENTS: 1. Students are required to complete Group Assignment in a group. 2. All answers must use proper English expression and grammar. Students must complete the Self & Peer Assessment Resource Kit (SPARK) Ratings of the group. Final ratings must be completed by the due date shown above. Otherwise a penalty of 20% will be given. 3. The assignment is to be submitted on-line by the due date. SUBMISSION: 1. Detailed instructions on how to submit the assignment is available in the Course Home Tab/Assignment Submission on Learning@Griffith. 2. The assignment must be word-processed using Microsoft Word or Excel, Times New Roman, 12point font, double-spaced. 3. Part A is to be submitted by the group (only one member submits the assignment on behalf of the group). Part B is to be submitted by the individual. 4. Each group member must complete the electronic assignment cover sheet in \"assignment \"on L@G. 5. Marks may be deducted if any of the requirements (1-4) or submission instructions (1 -3) are not completed. 1 Part A (by group): Consolidation Case Study: Perth Ltd and Summer Ltd Perth Ltd acquired 80% of the share capital of Summer Ltd on 1 July 2011. The following equity balances appeared in the records of Summer Ltd at the date of acquisition: $210,000 Share capital (210,000 shares) 6,100 General reserve 75,000 Retained earnings Financial information at 30 June 2016 of Perth Ltd and its subsidiary company, Summer Ltd, is shown below. Perth Ltd Summer Ltd $ $ Sales revenue Cost of sales 708,000 (273,000) 492,000 (178,500) 435,000 313,500 10,500 16,800 10,500 Administrative expenses Distribution expenses Depreciation on machinery Finance expenses Other expenses 462,300 (31,500) (189,000) (31,500) (27,600) (29,400) 324,000 (16,800) (126,000) (31,500) (12,000) (25,200) Total operating expenses Profit before tax Income tax expense (309,000) 153,300 (52,500) (211,500) 112,500 (34,500) Profit after tax Retained earnings (1/7/2015) 100,800 105,000 78,000 94,500 Transfer to general reserve Interim dividend paid Final dividend declared 205,800 (6,300) (31,500) (37,800) 172,500 (21,000) (42,000) Retained earnings (30/6/2016) General reserve Other components of equity (1/7/2015) Share capital (75,600) 130,200 105,000 27,300 630,000 (63,000) 109,500 36,000 21,000 210,000 Gross Profit Other revenue: Debenture interest Management fees Dividend from Summer Ltd 2 Liabilities: Debentures Deferred tax liability Current tax liability Dividend payable Other current liabilities Cash and cash equivalents Trade receivables Inventory Debentures in Perth Ltd Shares in Summer Ltd Machinery (cost) Accumulated depreciation - machinery Other depreciable assets Accumulated depreciation Deferred tax asset Land 255,000 52,500 37,800 189,000 60,000 14,700 35,700 42,000 25,200 1,426,800 107,100 68,250 189,000 270,000 252,000 (136,500) 159,600 (84,000) 179,250 422,100 554,100 6,000 40,200 58,500 105,000 214,200 (115,500) 115,500 (52,500) 63,000 119,700 1,426,800 554,100 Additional information i. At 1 July 2011, all the identifiable assets and liabilities of Summer Ltd were recorded at fair value except for the following assets: Carrying amount Fair value Land $62,000 $80,000 105,000 120,000 Machinery (cost 135,000) 42,000 36,000 Receivable The machinery has an expected life of 10 years, with benefits being received evenly over that period. Differences between carrying amounts and fair values are adjusted on consolidation. The land on hand at 1 July 2011 was sold on 1 March 2013 for $84,000. Any valuation reserve in relation to the land is transferred on consolidation to retained earnings. By 30 June 2012, receivables had all been collected. ii. Perth Ltd uses the full goodwill method. The fair value of the non-controlling interest at 1 July 2011 was $66,000. iii. Opening inventory of Summer Ltd includes unrealised profit of $5,000 on inventory sold by Perth Ltd. It was all sold by Summer Ltd during the year. iv. During the year, intragroup sales by Summer Ltd to Perth Ltd were $80,000. The mark-up on cost of all sales was 25%. At 30 June 2016, Perth Ltd's inventory included $35,000 of items acquired from Summer Ltd. v. On 1 January 2016, Summer Ltd sold an item of inventory to Perth Ltd for $18,000 at a profit before tax of $3000. Perth Ltd had treated this item as an addition to its machinery and depreciated at 10% p.a. straight-line. 3 vi. On 1 April 2016, Perth Ltd sold $15,000 worth of inventory to Summer Ltd. The cost of this inventory was $9000. By 30 June 2016, Summer Ltd had sold 60% of the inventory to outside entities. vii. Some of the items manufactured by Summer Ltd are used as machinery by Perth Ltd. One of the machinery items held by Perth Ltd at 30 June 2016 was purchased from Summer Ltd on 1 January 2015. It had cost Summer Ltd $17,500 to manufacture this item and was sold to Perth Ltd for $25,000. Perth Ltd depreciates such items at 10% p.a. on cost. viii. Management fees derived by Perth Ltd were all from Summer Ltd and represented charges made for administration. ix. The tax rate is 30%. Prepare the consolidation journal entries Note: Consolidation worksheet and all calculation should be presented in the same format as used in Leo, Hoggett and Sweeting, 10ed textbook. 4

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Fundamentals

Authors: John J. Wild

5th edition

1308500102, 1308500106, 78025753, 978-0078025754

More Books

Students also viewed these Accounting questions

Question

What is job enlargement ?

Answered: 1 week ago

Question

what is the most common cause of preterm birth in twin pregnancies?

Answered: 1 week ago

Question

Which diagnostic test is most commonly used to confirm PROM?

Answered: 1 week ago

Question

What is the hallmark clinical feature of a molar pregnancy?

Answered: 1 week ago

Question

4. Similarity (representativeness).

Answered: 1 week ago