Need help with consolidation questions.

Question 1 -Non-Controlling Interest

Question 2 - Controlling entries

Please read the notes and marking guide for instructions on how to answer.

Prescribed Text

Leo, K. J., Sweeting, J., Knapp, J. & McGowan, S. (2014). Company Accounting, (10th ed.). John Wiley & Sons.

CAANZ Financial Reporting Handbook 2015, 2016 or 2017. Brisbane: John Wiley & Sons Ltd

Questions are attached below

1 Consolidated worksheetTom atLtd 30/06/17 Jerry Ltd Sales revenue Other revenue Total trading income Cost of sales Other expenses Total expenses Profit from trading Proceeds from sale of plant Carrying amount of plant sold Gain/loss on sale of plant Profit before tax Income tax expense Profit after tax ACC322 201730 418,00 0 49,00 0 220,00 0 20,00 0 467,00 0 90,00 0 240,00 0 85,00 0 165,00 0 255,00 0 212,00 0 10,00 0 90,00 0 175,00 0 65,00 0 4,20 0 8,50 0 3,00 0 1,50 0 213,50 0 22,00 0 1,20 0 66,20 0 13,00 0 191,50 0 53,20 0 Adjustments Dr Cr Group Review and Problem Questions Dr NCI Cr 27/02/2017 Parent 2 Retained earnings 1/7/16 Dividend paid Dividend declared Retained earnings 30/6/17 Share capital General reserve 102,50 0 76,80 0 15,00 0 6,00 0 273,00 0 20,00 0 40,00 0 12,00 0 4,00 0 114,00 0 160,00 0 50,00 0 333,00 0 2,20 0 21,00 0 324,00 0 1,80 0 25,50 0 32,00 0 Total equity - parent Total equity - NCI BCVR TOTAL EQUITY Current tax liability Payables Loans Debentures Total liabilities Total equity & liabilities Inventory ACC322 201730 170,00 0 193,20 0 526,20 0 14,00 0 59,30 0 383,30 0 18,00 0 Review and Problem Questions 27/02/2017 3 Plant & equipment Accumulated depreciation Land Cash at bank Receivables Deferred tax asset Shares in Jerry Ltd Loans 150,00 0 (75,00 0) 119,00 0 20,00 0 36,20 0 2,00 0 190,00 0 70,00 0 170,00 0 (60,00 0) 85,00 0 36,30 0 133,00 0 1,00 0 526,20 0 383,30 0 Goodwill Total assets ACC322 201730 Review and Problem Questions 27/02/2017 Question 1 Tom Ltd acquired 75% of the shares in Jerry Ltd for $190,000 on 1 July 2014. At this date, the equity in Jerry Ltd comprised: Share capital $160,000 General reserve 30,000 Retained earnings 50,000 All the assets and liabilities in Jerry Ltd were recorded at fair value, except for inventory, which had a carrying amount of $15,000 and a fair value of $20,000. The inventory had all been sold by 30 June 2015. Additional information relevant for the period 1 July 2014 - 30 June 2016: (a) Tom Ltd uses the partial goodwill method. (b) Profits earned by the subsidiary during the year ended 30 June 2015 was $12,800 and 30 June 2016 was $14,000. (c) From 1 July 2014 to 30 June 2016, there had been no movements in Share capital, General reserve and no dividends paid or declared in Jerry Ltd. (d) During the year ended 30 June 2016, Jerry Ltd sold inventory to Tom Ltd for $48,000. At 30 June 2016, Tom Ltd still had some of this inventory on hand. This inventory had been sold to it by Jerry Ltd at a before-tax profit of $4,000. Additional information relevant for the period 1 July 2016 - 30 June 2017: (a) The inventory sold to Tom Ltd by Jerry Ltd for a before-tax profit of $4,000 in the previous period was sold to external entities during the year ended 30 June 2017. (b) On 1 January 2017, Jerry Ltd sold plant to Tom Ltd for a before-tax profit of $1,200. This plant was carried at $3,000 in the records of Jerry Ltd at time of sale. Depreciation on this type of plant is calculated using a 20% per year straight-line method. (c) On 1 February 2017, Tom Ltd sold an item of plant to Jerry Ltd. While Tom Ltd classified this as plant, Jerry Ltd classified it as inventory. The sales price was $10,000 which included a profit to Tom Ltd of $1,500. Jerry Ltd sold this to another entity on 31 March 2017 for $12,000. (d) On 30 June 2017 Tom Ltd made an interest free loan of $20,000 to Jerry Ltd which is not repayable until 30 June 2022. (e) Tom Ltd recognizes dividends receivable from its subsidiary when the dividends are declared. Required: 1 Prepare an acquisition analysis at 1 July 2014 using the partial goodwill method. (3 marks) 2 Prepare consolidation journal entries as at 1 July 2014. (3 marks) 3 Prepare consolidation journal entries for the year ended 30 June 2015. (4 marks) 4 Prepare consolidation journal entries for the year ended 30 June 2016. (4 marks) 5 Prepare consolidation journal entries for the year ended 30 June 2017. (13 marks) NOTE: Your consolidation journal entries for Required 5. should be provided in the following format: (a) Business combination valuation entries at 30 June 2017 (if applicable) (b) Pre-acquisition entries at 30 June 2017 (c) NCI share of equity at 1 July 2014 (d) NCI share of equity changes from 1 July 2014 to 30 June 2016 (e) NCI share of equity changes from 1 July 2016 to 30 June 2017 (f) Intragroup transaction adjustments required as at 30 June 2017 You will also need to refer to the consolidation worksheet in Required 6 to complete Required 5. 6. Complete the consolidation worksheet for the year ended 30 June 2017: (8 marks) Note: A Word version of this worksheet will also be made available within 'Resources'. Reference your worksheet entries back to consolidation journals from Required 5 in the space provided. Marking Guide - Question 1 Part A: 1. Acquisition analysis- partial goodwill method 2. Consolidation journal entries immediately after acquisition date 3. Consolidation journal entries as at 30 June 2015 4. Consolidation journal entries as at 30 June 2016 Consolidation journal entries as at 30 June 2017 Max. marks awarded 3 3 4 4 13 Consolidation worksheet as at 30 June 2017 Total 8 35 Question 2 (Max 600) April Ltd is a Japanese entity that has successfully developed a scarce raw material called 'December'. It is an essential input for May Ltd and June Ltd's manufacturing processes and both of these companies are customers of April Ltd. Below are the details of April Ltd's shareholders and directors: Name of shareholders May Ltd June Ltd July Ltd % of ordinary voting shares owned 30% 22% 25% Number of positions held on April Ltd board of directors 4 2 2 The remaining shares of April Ltd are widely held by several independent unrelated individuals. May Ltd is not related to June Ltd or July Ltd, however June Ltd is a wholly owned subsidiary of July Ltd. The other three (3) of the eleven (11) seats on April Ltd's board of directors are held by independent directors. Required: On the basis of the above information and the requirements of relevant accounting standard(s), advise whether April Ltd is a subsidiary of May Ltd. Marking Guide Marking Guide - Question 2 Max. marks awarded Uses information from question in justifying response 4 Provides the correct response to whether April Ltd is a subsidiary of May Ltd 2 References to accounting standard(s) 3 APA Referencing provided 1 Total 10 Correctly explain the classification of the subsidiary n details, supported by reference to the question and referenced to AASB standards paragraphs(s) Accurately and consistently adhered to APA 6th style referencing conventions in both in text referencing and the reference list