Introduction Thyme Publishing Ltd is a publicly listed company located in Melbourne. The company, founded in 2001, has undertaken a growth and expansion phase in recent years, particularly with its online business and diversification into graphic design. It is now recognised as a major Australian bookseller, publisher, and digital graphic designer in Australia and New Zealand. Thyme Publishing Ltd has three entities that it controls: Island Publications Ltd (Hobart, Tasmania) (60% of the share capital owned). Creative Design Pty Ltd (Paradise, Tasmania) (100% of the share capital owned). Cloud Press Ltd (Christchurch, NZ) (100% of the share capital owned). You have been appointed as group accountant for Thyme Publishing Ltd. As such you are required to prepare consolidated financial statements for the Parent and its subsidiaries for the year ended 30 June 2019. In addition, the board have requested that you provide a brief report on the consolidation policies of an ASX 200 company to assist in their deliberations for Thyme Publishing's 2020 vision & strategic planning for the future. Further details are provided at the end of this document. Questions about the content of this assignment MUST be posted on MyLO. General Information about Thyme Publishing Ltd o o o The presentation currency for the group is AUD. Thyme Publishing Ltd treats Cloud Press (NZ) Ltd as a foreign entity according to AASB121 and uses the current rate method to translate financial information. The functional currency for Cloud Press Ltd is NZD. You will first need to translate the New Zealand operations into the presentation currency of the group before applying consolidation principles. The management of Thyme Publishing Ltd values any non-controlling interest at the proportionate share of Island Publications identifiable net assets, using the partial goodwill method (AASB3). Thyme Publishing Ltd recognises a receivable for dividends when they are declared by a subsidiary. All entities within the group use the perpetual inventory method. The group uses the direct method to present cash flows from operating activities. Round to the nearest dollar for ALL journal entries and calculations (NOT '000s or $m). Expenses need to be classified by function in the consolidated financial statements. For all financial statements, you may use either $ OR $'000 (NOT $m) but all must be the same. The Australian income tax rate is 30%. New Zealand's company tax rate is 28%. o O o o o o o Additional Information relating to Island Publications Ltd: a. On 1 July 2017, Thyme Publishing Ltd acquired 60 per cent of the share capital of Island Publications Ltd for $1 500 000 cash. An extract of Island Publications Ltd's balance sheet immediately before the acquisition is shown below: Island Publications Ltd Shareholders' equity Share capital 1,400,000 General reserve 600,000 Retained profits 150,000 Page 1 b. On 1 July 2017, Island Publications Ltd had recorded all its identifiable net assets at fair value, except for plant which cost $550 000 and had a carrying amount of $450 000. The fair value of the plant was assessed at $480 000. It was expected to have a further useful life of 5 years and the benefits are expected to be consumed evenly over this period. The plant had not been revalued in the books of Island Publications Ltd prior to consolidation. C. On 30 June 2018, 10% of Island Publications Ltd's inventory was sold to Thyme Publishing Ltd at a profit of $35 000. All of this inventory had been sold to external entities by 30 June 2019. Additional Information relating to Creative Design Pty Ltd: d. On 1 July 2016, Thyme Publishing Ltd purchased 100 per cent of the shares of Creative Design Pty Ltd for $700 000 cash. An extract of Creative Design Ltd's balance sheet immediately before the acquisition is shown below: Creative Design Pty Ltd Shareholders' equity Share capital General reserve Retained profits 450,000 100,000 230,000 e. At the time of investment, the liabilities of Creative Design Pty Ltd were all recorded at fair value, except for a contingent liability relating to an ongoing legal dispute. Creative Design Pty Ltd was being sued for an amount of $75 000 in a wrongful dismissal case. Lawyers advised that there was an 80% chance they will lose. The case remained outstanding at acquisition and therefore a contingent liability was disclosed in the notes of Creative Design Pty Ltd. Six months after acquisition Thyme Publishing Ltd intervened and negotiated a $60,000 payment to settle the case out of court. Creative Design Pty Ltd recorded an expense for the $60,000 for the period ending 30 June 2017. f. Acom A comparison of the carrying amounts and fair values of its identifiable assets indicated no differences except for an internally generated intangible asset (a publishing title with a fair value of $20,000) and the furniture shown below, which is depreciated on a straight-line basis and has an expected further useful life of 7 years (from acquisition). It has no residual value. Carrying amount Fair Value Furniture (cost $108 500) $90 000 $94 500 The publishing title has an indefinite life and is therefore tested for impairment annually. It has not been impaired. On 1 February 2017, Creative Design Pty Ltd entered into a rental agreement with Thyme Publications Ltd to rent a spare warehouse to use as a studio. The agreement was for 5 years and specified a payment of $6 000 p.a. to be paid annually in advance on 1 February. On 1 January 2018, Creative Design Pty Ltd sold equipment costing $125 000 to Thyme Publications Ltd for $130 000. Creative Design Pty Ltd had not charged depreciation on the equipment as it had only purchased it from an external entity on 28 December 2017 at an end of year sale. Both companies depreciated equipment at 10% straight-line on cost. Page 2 i. On 20 May 2019 Creative Design Pty Ltd purchased inventory from Thyme Publishing Ltd for $30 000. This inventory had previously cost Thyme $24 000. Creative Design Pty Ltd had not paid Thyme Publishing Ltd for these goods as at 30 June 2019, but at that date Creative Design Pty Ltd had already sold 58% to external parties. Creative Design Pty Ltd sold the remainder of the goods to an external party on the 9 July 2019 for a total profit of $20 000. Additional Information relating to Cloud Press (NZ) Ltd: j. On 30 June 2019, Thyme Publishing Ltd acquired all the issued shares of Cloud Press Ltd, an online publishing company based in Christchurch, New Zealand, for AUD$420 000 cash. Cloud Press (NZ) Ltd's income statement and balance sheet (given in NZ dollars) immediately before the acquisition is shown in the attached excel worksheet. k. Sales and other expenses were incurred evenly throughout the period ended 30 June 2019. I. Relevant exchange rates are as follows: (these are fictitious for the purposes of this assignment) 1 July 2016 1 July 2017 1 July 2018 30 June 2019 Average rate for the year 2019 Ending inventory acquired 1 NZD = AUD$0.90 1 NZD = AUD$0.92 1 NZD = AUD$0.94 1 NZD = AUD$0.95 1 NZD = AUD$0.93 1 NZD = AUD$0.96 The working income statements and balance sheets of Thyme Publishing Ltd, Island Publications Ltd, Creative Design Pty Ltd and Cloud Press (NZ) Ltd for the year ended 30 June 2019 are provided to you, as group accountant, by the financial accountants of the respective entities. They are shown in the accompanying excel spreadsheet document (in the worksheet tab). Required Thyme Publishing Ltd has asked you to prepare a full set of Consolidated Financial Statements for the group for the year ended 30 June 2019 in accordance with applicable accounting standards. In addition, you have been asked to provide a brief report on the subsidiaries and consolidation policies of the ASX 200 company assigned to you. The purpose is to compare and contrast the policies, decisions and outcomes (financial statements) with those of Thyme Publishing to assist the Thyme board with their 2020 vision & strategic planning for the future. Introduction Thyme Publishing Ltd is a publicly listed company located in Melbourne. The company, founded in 2001, has undertaken a growth and expansion phase in recent years, particularly with its online business and diversification into graphic design. It is now recognised as a major Australian bookseller, publisher, and digital graphic designer in Australia and New Zealand. Thyme Publishing Ltd has three entities that it controls: Island Publications Ltd (Hobart, Tasmania) (60% of the share capital owned). Creative Design Pty Ltd (Paradise, Tasmania) (100% of the share capital owned). Cloud Press Ltd (Christchurch, NZ) (100% of the share capital owned). You have been appointed as group accountant for Thyme Publishing Ltd. As such you are required to prepare consolidated financial statements for the Parent and its subsidiaries for the year ended 30 June 2019. In addition, the board have requested that you provide a brief report on the consolidation policies of an ASX 200 company to assist in their deliberations for Thyme Publishing's 2020 vision & strategic planning for the future. Further details are provided at the end of this document. Questions about the content of this assignment MUST be posted on MyLO. General Information about Thyme Publishing Ltd o o o The presentation currency for the group is AUD. Thyme Publishing Ltd treats Cloud Press (NZ) Ltd as a foreign entity according to AASB121 and uses the current rate method to translate financial information. The functional currency for Cloud Press Ltd is NZD. You will first need to translate the New Zealand operations into the presentation currency of the group before applying consolidation principles. The management of Thyme Publishing Ltd values any non-controlling interest at the proportionate share of Island Publications identifiable net assets, using the partial goodwill method (AASB3). Thyme Publishing Ltd recognises a receivable for dividends when they are declared by a subsidiary. All entities within the group use the perpetual inventory method. The group uses the direct method to present cash flows from operating activities. Round to the nearest dollar for ALL journal entries and calculations (NOT '000s or $m). Expenses need to be classified by function in the consolidated financial statements. For all financial statements, you may use either $ OR $'000 (NOT $m) but all must be the same. The Australian income tax rate is 30%. New Zealand's company tax rate is 28%. o O o o o o o Additional Information relating to Island Publications Ltd: a. On 1 July 2017, Thyme Publishing Ltd acquired 60 per cent of the share capital of Island Publications Ltd for $1 500 000 cash. An extract of Island Publications Ltd's balance sheet immediately before the acquisition is shown below: Island Publications Ltd Shareholders' equity Share capital 1,400,000 General reserve 600,000 Retained profits 150,000 Page 1 b. On 1 July 2017, Island Publications Ltd had recorded all its identifiable net assets at fair value, except for plant which cost $550 000 and had a carrying amount of $450 000. The fair value of the plant was assessed at $480 000. It was expected to have a further useful life of 5 years and the benefits are expected to be consumed evenly over this period. The plant had not been revalued in the books of Island Publications Ltd prior to consolidation. C. On 30 June 2018, 10% of Island Publications Ltd's inventory was sold to Thyme Publishing Ltd at a profit of $35 000. All of this inventory had been sold to external entities by 30 June 2019. Additional Information relating to Creative Design Pty Ltd: d. On 1 July 2016, Thyme Publishing Ltd purchased 100 per cent of the shares of Creative Design Pty Ltd for $700 000 cash. An extract of Creative Design Ltd's balance sheet immediately before the acquisition is shown below: Creative Design Pty Ltd Shareholders' equity Share capital General reserve Retained profits 450,000 100,000 230,000 e. At the time of investment, the liabilities of Creative Design Pty Ltd were all recorded at fair value, except for a contingent liability relating to an ongoing legal dispute. Creative Design Pty Ltd was being sued for an amount of $75 000 in a wrongful dismissal case. Lawyers advised that there was an 80% chance they will lose. The case remained outstanding at acquisition and therefore a contingent liability was disclosed in the notes of Creative Design Pty Ltd. Six months after acquisition Thyme Publishing Ltd intervened and negotiated a $60,000 payment to settle the case out of court. Creative Design Pty Ltd recorded an expense for the $60,000 for the period ending 30 June 2017. f. Acom A comparison of the carrying amounts and fair values of its identifiable assets indicated no differences except for an internally generated intangible asset (a publishing title with a fair value of $20,000) and the furniture shown below, which is depreciated on a straight-line basis and has an expected further useful life of 7 years (from acquisition). It has no residual value. Carrying amount Fair Value Furniture (cost $108 500) $90 000 $94 500 The publishing title has an indefinite life and is therefore tested for impairment annually. It has not been impaired. On 1 February 2017, Creative Design Pty Ltd entered into a rental agreement with Thyme Publications Ltd to rent a spare warehouse to use as a studio. The agreement was for 5 years and specified a payment of $6 000 p.a. to be paid annually in advance on 1 February. On 1 January 2018, Creative Design Pty Ltd sold equipment costing $125 000 to Thyme Publications Ltd for $130 000. Creative Design Pty Ltd had not charged depreciation on the equipment as it had only purchased it from an external entity on 28 December 2017 at an end of year sale. Both companies depreciated equipment at 10% straight-line on cost. Page 2 i. On 20 May 2019 Creative Design Pty Ltd purchased inventory from Thyme Publishing Ltd for $30 000. This inventory had previously cost Thyme $24 000. Creative Design Pty Ltd had not paid Thyme Publishing Ltd for these goods as at 30 June 2019, but at that date Creative Design Pty Ltd had already sold 58% to external parties. Creative Design Pty Ltd sold the remainder of the goods to an external party on the 9 July 2019 for a total profit of $20 000. Additional Information relating to Cloud Press (NZ) Ltd: j. On 30 June 2019, Thyme Publishing Ltd acquired all the issued shares of Cloud Press Ltd, an online publishing company based in Christchurch, New Zealand, for AUD$420 000 cash. Cloud Press (NZ) Ltd's income statement and balance sheet (given in NZ dollars) immediately before the acquisition is shown in the attached excel worksheet. k. Sales and other expenses were incurred evenly throughout the period ended 30 June 2019. I. Relevant exchange rates are as follows: (these are fictitious for the purposes of this assignment) 1 July 2016 1 July 2017 1 July 2018 30 June 2019 Average rate for the year 2019 Ending inventory acquired 1 NZD = AUD$0.90 1 NZD = AUD$0.92 1 NZD = AUD$0.94 1 NZD = AUD$0.95 1 NZD = AUD$0.93 1 NZD = AUD$0.96 The working income statements and balance sheets of Thyme Publishing Ltd, Island Publications Ltd, Creative Design Pty Ltd and Cloud Press (NZ) Ltd for the year ended 30 June 2019 are provided to you, as group accountant, by the financial accountants of the respective entities. They are shown in the accompanying excel spreadsheet document (in the worksheet tab). Required Thyme Publishing Ltd has asked you to prepare a full set of Consolidated Financial Statements for the group for the year ended 30 June 2019 in accordance with applicable accounting standards. In addition, you have been asked to provide a brief report on the subsidiaries and consolidation policies of the ASX 200 company assigned to you. The purpose is to compare and contrast the policies, decisions and outcomes (financial statements) with those of Thyme Publishing to assist the Thyme board with their 2020 vision & strategic planning for the future