o me but the laHey guys everything is prity much clear tst year entries can you please specify those records. Thanks.

Page 16 question 19.9 in the file attached. Those records are as follows:

3. Worksheet entries at 30 June 2018

Business combination valuation entries

Depreciation expense Dr 500

Income tax expense Cr 150

Retained earnings (1/7/17) Dr 1050

Transfer from business combination

valuation reserve Cr 1400

Goodwill Dr 1300

Business combination valuation entry Cr 1300

Pre-acquisition entries

Retained earnings (1/7/17) * Dr 7800

Share capital Dr 50000

Reserves Dr 12500

Business combination valuation reserve Dr 1 700

Shares in Colin Ltd Cr 72 000

* 5 000 + $4 000(1 -30%)

Transfer from business combination val?n reserve Dr 1400

Business combination valuation reserve Cr 1400

Tut1 Question 15.17 comprehensive of equity Statement of profit or loss and other income (classify expenses by nature), statement financial position and statement of changes in The summarised trial balance of Star Ltd as at 30 June 2017 is shown below. Debit Credit Ordinary share capital (1 500 000 shares) $1 062 500 General reserve (1/7/16) 175 000 Revaluation surplus (1/7/16) 60 000 Retained earnings (1/7/16) 104 500 Bank loan (long-term) 43 500 Deferred tax liability (1/7/16) 3 000 Mortgage (long-term) 50 000 Accounts payable 132 000 Provision for employee benefits (long-term) 75 000 Allowance for doubtful debts 37 500 Accumulated depreciation: Plant 9 500 Office furniture 850 Buildings 2 500 Land (at cost) $ 211 500 Factory buildings (at cost) 250 000 Accounts receivable 542 950 Plant (at cost) 90 000 Inventory 651 100 Office furniture (at cost) 6 000 Goodwill 200 000 Cash at bank 278 800 Employee benefits expense 12 500 Sales 1 730 500 Raw materials and consumables used 1 083 100 Changes in inventories of finished goods and 3 100 work in progress Other expenses (excluding depreciation but including interest expense $31 000 on bank 163 500 loan and mortgage) $3 489 450 $3 489 450 The accountant for the company seeks your assistance in preparing the financial statements for external reporting purposes and advises you of the following information that needs to be taken into account before finalising the financial statements. Additional information (a) Depreciation is to be provided for: Plant $9 000 Office furniture 800 Buildings 2 500 (b) The estimated total income tax expense relating to profit or loss items only for 1 2017 is $200 000, consisting of $150 000 for the current liability and $50 000 as a deferred tax liability. (c) Final dividends of 2 cents per share were declared by directors. (d) Directors decided to transfer $10 000 from retained earnings to general reserve. (e) Following expert advice, the directors decided on 30 June 2017 to revalue the land and factory buildings to reflect current fair values. Consequently, directors placed a value of $300 000 on land and $350 000 on the buildings. (f) Company tax rate is 30%. Required Based on the ledger balances and the additional information provided, prepare a statement of profit or loss and other comprehensive income (classify expenses by nature), a statement of financial position and a statement of changes in equity for Star Ltd for the year ended 30 June 2017, to comply with AASB 101. [Comparative information must be disclosed in respect of the preceding period for all amounts reported in the current period's financial statements in accordance with AASB 101 paragraph 38. However this information is not provided in the question]. STAR LTD Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2017 Revenue $ 1 730 500 Changes in inventories of finished goods and work in progress 3 100 Raw materials and consumables used (1 083 100) Employee benefits expense (12 500) Depreciation* (12 300) Other expenses** (132 500) Finance costs (31 000) Profit before income tax 462 200 Income tax expense (200 000) Profit for the period 262 200 Other comprehensive income Items that will not be reclassified to profit or loss Gain on revaluation of land*** 88 500 Gain on revaluation of buildings*** 105 000 Income tax relating to items not reclassified (58 050) Other comprehensive income for the year, net of tax 135 450 Total comprehensive income for the year $ 397 650 Workings: *Depreciation: Plant Office\tfurniture Buildings **Other\texpenses: $\t9\t000 800 2\t500 12\t300 2 Other\texpenses $\t163\t500 Less\tinterest\texpense (31\t000) 132\t500 ***Gain\tarising\tduring\tthe\tyear\ton\trevaluation\tof: Land\t(300\t000\t-211\t500) $\t88\t500 Buildings\t(350\t000\t-\t(250\t000\t-\t(2\t500\tacc.\tdep.\t+\t2\t500\tdep.)))105\t000 STAR\tLTD Statement of Financial Position as at 30 June 2017 ASSETS Current assets Cash and cash equivalents Trade and other receivables* Inventories Total current assets Non-current assets Property, plant and equipment** Goodwill Total non-current assets Total assets $ 278 800 505 450 651 100 1 435 350 725 850 200 000 925 850 $ 2 361 200 LIABILITIES Current liabilities Trade and other payables*** Current tax payable Total current liabilities $ 162 000 150 000 312 000 Non-current liabilities Long-term borrowings**** Deferred tax liabilities***** Long-term provisions Total non-current liabilities Total liabilities 93 500 111 050 75 000 279 550 $ 591 550 Net assets $ 1 769 650 EQUITY Share capital Reserves Retained earnings Total equity $ 1 062 500 380 450 326 700 $ 1 769 650 Workings: *Trade and other receivables: Accounts receivable Allowance for doubtful debts $ 542 950 (37 500) 505 450 3 **Property,\tplant\tand\tequipment: Freehold\tland Factory\tbuildings Plant Accumulated\tdepreciation\t[9\t500\t+\t9\t000] Office furniture Accumulated\tdepreciation\t[850\t+\t800] ***Trade and other payables: Accounts payable Dividend payable (1 500 000 shares x 2 cents per share) $300\t000 350\t000 650\t000 90 000 (18\t500) 71\t500 6 000 (1\t650) 4\t350 725\t850 $ 132 000 30 000 162 000 ****Long-term borrowings: Bank\tloan $\t43\t500 Mortgage 50\t000 93\t500 *****\tDeferred\ttax\tliabilities: Balance\t1/7/2016 $\t3\t000 Deferred\ttax\tportion\tof\tincome\ttax\texpense 50\t000 Revaluation\tof: Land\t(30%\tx\t[300\t000\t-\t211\t500]) 26\t550 Buildings\t(30%\tx\t[350\t000\t-\t(250\t000\t-\t(2\t500\t+\t2\t500)]))31\t500 58\t050 111\t050 STAR LTD Statement of Changes in Equity for\tthe\tyear\tended\t30\tJune\t2017 Share General Reval. Retained Total capital reserve surplus earnings Balance\tat\t1\tJuly\t2016 $\t1\t062\t500 $\t175\t000 $\t60\t000 $\t104\t500\t$\t1\t402\t000 Total\tcomprehensive\tincome for\tthe\tyear - - 135\t450 262\t200 397 650 Dividend\tdeclared\t-\tordinary - - - (30\t000) (30\t000) Transfer\tto\tgeneral\treserve - 10\t000 - (10\t000) - Balance\tat\t30\tJune\t2017$\t1\t062\t500 $\t185\t000 $\t195\t450 $\t326\t700\t$\t1\t769\t650 Dividends: 2\tcents\tper\tshare 4 Tut2 Question 6.7 entries Current and deferred tax worksheets and tax You are the accountant of Brand New Friend Ltd, a reporting entity with a year end of 30 June 2017. You are currently preparing the tax information for inclusion in the financial statements. An extract from the statement of profit or loss and other comprehensive income is as follows: Profit before tax Included in the profit: Employee expenses Legal expenses Exempt income Interest revenue Audit fees expense Rent revenue Interest expense Bad debts expense Depreciation expense - plant and equipment Depreciation expense - buildings Entertainment expenses $ 500 000 550 000 125 000 75 000 30 000 80 000 20 000 20 000 30 000 52 500 10 000 5 000 Additional information (a) Exempt income is not subject to tax. (b) Interest is assessable on receipt and deductible when paid. Interest receivable at 30 June 2017 is $25 000 (2016: $30 000). Interest payable at 30 June 2017 is $1000 (2016: $6000). (c) The company raised an accrual liability of $35 000 for work not performed by 30 June 2017 (2016: $30 000). Fees for audit work are not deductible unless the audit work has been performed. (d) Rent revenue relates to a contract where the annual rent is received in advance. The unearned revenue liability at 30 June 2017 is $20 000 (2016: $15 000). Rent is assessable when received. (e) The bad debts expense relates to an account that has been written off. (f) Property, plant and equipment is as follows: Property, plant and equipment Buildings at cost Accumulated depreciation - buildings Plant and equipment at cost Accumulated depreciation - plant and equipment 30 June 2017 $ 500 000 (50 000) 450 000 350 000 (97 500) 30 June 2016 $ 500 000 (40 000) 460 000 150 000 (45 000) 252 500 105 000 $ 702 500 $ 565 000 The company's buildings do not qualify for tax deductions and are not subject to capital gains tax. Tax depreciation for 30 June 2017 is $70 000. The tax written down value of plant and equipment at 30 June 2017 is $220 000 (2016: $90 000). (g) Entertainment expenses are not deductible. 5 (g) Legal expenses include $50 000 related to capital transactions that are not deductible. (h) Employee expenses for the year include $50 000 for annual leave and $10 000 for long-service leave. The provision for employee benefits at 30 June 2017 is $180 000 (2016: $170 000). (i) The deferred tax balances at 30 June 2016 are: deferred tax liability $13 500 and deferred tax asset $66 300. (j) The company tax rate is 30%. Required Complete\tthe\tcurrent\tand\tdeferred\ttax\tworksheets\tof\tBrand\tNew\tFriend Ltd\tfor\t30\tJune\t2017\tand\tuse\tthe\tworksheets\tto\tprepare\tthe\ttax\tentries\tfor the\tyear. Current\tTax\tWorksheet for\tthe\tyear\tended\t30\tJune\t2017 Accounting\tprofit $500,000 Add: $50\t000 5\t000 Depreciation\texpense\t-\tbuildings 10\t000 Depreciation\texpense\t-\tplant\tand\tequip 52\t500 Interest\texpense 20\t000 Audit\tfees\texpense 80\t000 Employee\tleave\texpenses\t(A/L\t&\tLSL) 60\t000 Rent\treceived 25\t000 Interest\treceived 35\t000 337\t500 Exempt\tincome 75\t000 Rent\trevenue 20\t000 Interest\trevenue 30\t000 Interest\tpaid 25\t000 Tax\tdepreciation\t-\tplant\t&\tequip 70\t000 Audit\tfees\tdeduction 75\t000 Leave\tpaid\tto\temployees 50\t000 345\t000 Legal\texpenses\t(non-deductible) Entertainment\texpenses Less: 6 Taxable\tprofit 492\t500 Current\ttax\tliability\t@\t30% $147\t750 The\tjournal\tentry\tfor\tcurrent\ttax\tfor\tthe\tyear\tto\t30\tJune\t2017\tis\tas\tfollows: Income\tTax\tExpense Dr 147\t750 Current\tTax\tLiability Cr 147\t750 Workings 1/07/16 Beginning\tbalance Interest\trevenue Interest\tpaid Interest\treceivable $ $ 30\t000 Interest\treceived 35\t000 30\t000 30/06/ Ending\tbalance 25\t000 17 60\t000 60\t000 30/06/1 Ending\tbalance 7 Interest\tpayable $ 25\t000 1/07/1 Beginning\tbalance 6 1\t000 Interest\texpense 20\t000 $ 6\t000 20\t000 26\t000 Unearned\trent\trevenue $ Rent\trevenue 20\t000 1/07/1 Beginning\tbalance 6 30/06/1 Ending\tbalance 20\t000 Rent\treceived 7 40\t000 $ 15\t000 25\t000 40\t000 Provision\tfor\temployee\tbenefits $ $ LSL\tpaid 50\t000 1/07/1 Beginning\tbalance 170 6 000 30/06/1 Ending\tbalance 180\t000 Leave\texpenses 60\t000 7 230\t000 230\t000 7 Deferred\ttax\tworksheet\tas\tat\t30\tJune\t2017 Carrying Future Amount Deductible Amount Deductibl e Temporar y Difference s Interest\treceivable 25\t000 0 0 [1] 25\t000 Plant\tand\tequip\t(net) 252\t500 220\t000 220\t000 [1] 32\t500 Accrued\taudit\tfees 35\t000 35\t000 0 [1] 35\t000 Interest\tpayable 1\t000 1\t000 0 [1] 1\t000 Provision\temp\tbenefits 180\t000 180\t000 0 [1] 180\t000 Unearned\trent\trevenue 20\t000 20\t000 0 [2] 20\t000 Total\tTemporary\tDiffs 57\t500 236\t000 Deferred\ttax\tliability 30% Deferred\ttax\tasset\t30% 17\t250 70\t800 Beginning\tbalances 13\t500 66\t300 Increase\tfor\tthe\tyear 3\t750 4\t500 Assets Liabilities Tax\tBase Taxable Temporar y Difference s Tax\tBases Assets\tthat\tgenerate\tfuture\ttaxable\teconomic\tbenefits:\t[1]\tTax\tBase\t=\tFuture\tdeductible\tamount Assets\tthat\tdo\tnot\tgenerate\tfuture\ttaxable\teconomic\tbenefits:\t[2]\tTax\tBase\t=\tCarrying\tamount Liabilities\texcept\tunearned\trevenue:\t[1]\tTax\tBase\t=\tCarrying\tamount\tless\tFuture\tdeductible amount Liability\tof\tunearned\trevenue:\t[2]\tTax\tBase\t=\tCarrying\tamount\t-\tUntaxed\tfuture\trevenue The\tjournal\tentry\tfor\tdeferred\ttax\tfor\tthe\tyear\tto\t30\tJune\t2017\tis\tas\tfollows: Deferred\tTax\tAsset Dr 4\t500 Deferred\tTax\tLiability Cr 3\t750 Income\tTax\tExpense Cr 750 8 Tut3 Question\t9.2 Application\tof\trevaluation\tmodel At 1 July 2014, Twister Ltd acquired the following non-current assets: Equipment Vehicles $100 000 80 000 They are in different classes of non-current assets and are to be measured at fair value. The expected useful lives of vehicles and equipment are 5 years and 10 years, respectively. At 30 June 2015, the fair values of both assets were assessed. The equipment had a fair value of $82 000, and the vehicles, $70 000. The remaining useful lives were assessed to be 8 years for equipment and 7 years for vehicles. At 30 June 2016, the fair value of equipment was assessed to be $81 750 and the fair value of vehicles was $55 000. Required Prepare the journal entries for Twister Ltd for the years ending 30 June 2015 and 2016. Twister\tLtd General\tJournal 30\tJune\t2015 Depreciation\texpense\t-\tequipment Dr 10\t000 Accumulated\tdepreciation\t-\tequipment Cr 10\t000 (Depreciation\t-\t$100\t000\t/\t10\tyears) Accumulated\tdepreciation\t-\tequipment Dr 10\t000 Equipment Cr 10\t000 (Write\tdown\tof\tequipment\tto\tcarrying\tamount:\t$90\t000) Expense-\twrite-down\tof\tequipment Dr 8\t000 Equipment Cr 8\t000 (Revaluation\tfrom\tcarrying\tamount\tto\tfair\tvalue: $90\t000\tto\t$82\t000) Depreciation\texpense\t-\tvehicles Dr 16\t000 Accumulated\tdepreciation\t-\tvehicles Cr 16\t000 (Depreciation\t-\t20%\tx\t$80\t000) Accumulated\tdepreciation\t-\tvehicles Dr 16\t000 Vehicles Cr 16\t000 (Write-down\tto\tcarrying\tamount:\t$64\t000) Vehicles Dr 6\t000 9 Gain\ton\trevaluation\tof\tvehicles\t(OCI) Cr (Revaluation\tincrement:\t$64\t000\tto\t$70\t000) Income\ttax\texpense\t(OCI) Dr 1\t800 Deferred\ttax\tliability Cr (Tax\teffect\tof\trevaluation\tincrement) Gain\ton\trevaluation\tof\tvehicles\t(OCI) Dr 6\t000 Income\ttax\texpense\t(OCI) Cr Asset\trevaluation\tsurplus\t-\tvehicles Cr (Accumulation\tof\tnet\trevaluation\tgain\tin\tequity) 30\tJune\t2016 Depreciation\tExpense\t-\tEquipment Dr 10\t250 Accumulated\tdepreciation\t-\tEquipment Cr 10\t250 (Depreciation\t-\t$82\t000\t/\t8years) Accumulated\tdepreciation\t-\tEquipment Dr 10\t250 Equipment Cr (Write\tdown\tfrom\tprevious\tFV\t$82\t000\tto carrying\tamount\t$71\t750) Equipment Dr 10\t000 Gain\ton\trevaluation\tof\tequipment\t(P/L) Cr 8\t000 Gain\ton\trevaluation\tof\tequipment\t(OCI) Cr 2\t000 (Revaluation\tof\tequipment\tfrom\t$71\t750\tto\t$81\t750, with\tprior\trevaluation\twrite-down\tof\t$8\t000) Income\ttax\texpense\t(OCI) Dr 600 Deferred\ttax\tliability Cr (Tax\teffect\tof\trevaluation\tgain) Gain\ton\trevaluation\tof\tequipment\t(OCI) Dr 2\t000 Income\ttax\texpense\t(OCI) Cr Asset\trevaluation\tsurplus Cr (Accumulation\tof\trevaluation\tgain\tin\tequity) Depreciation\texpense\t-\tvehicles Dr 10\t000 Accumulated\tDepreciation\t-\tvehicles Cr (Being\tdepreciation\t-\t$70\t000\t/\t7\tyears) Accumulated\tdepreciation\t-\tvehicles Dr 10\t000 Vehicles Cr (Write\tdown\tof\tvehicles\tto\tcarrying\tamount of\t$60\t000) 6\t000 1\t800 1\t800 4\t200 10\t250 600 600 1\t400 10\t000 10\t000 10 Loss\ton\trevaluation\tof\tvehicles\t(OCI) Dr Vehicles Cr (Write\tdown\tto\tfair\tvalue:\t$60\t000\tto\t$55\t000) 5\t000 5\t000 Deferred\ttax\tliability Income\ttax\texpense\t(OCI) (Tax\teffect\tof\twrite\tdown\tto\tfair\tvalue) Dr Cr 1\t500 1\t500 Asset\trevaluation\tsurplus Dr Income\ttax\texpense\t(OCI) Dr Loss\ton\trevaluation\tof\tvehicles\t(OCI) Cr (Reduction\tin\taccumulated\tequity\tdue\tto revaluation\tdecrement\ton\tvehicles) 3\t500 1\t500 5\t000 Proof\tof\tthe\topening\tdeferred\ttax\tbalances\tat\t1\tJuly\t2016 Deferred\ttax\tworksheet\tas\tat\t30\tJune\t2016 Deductibl e Temporar y Difference s Interest\treceivable 30\t000 0 0 [1] 30\t000 Plant\tand\tequip\t(net) 105\t000 90\t000 90\t000 [1] 15\t000 Accrued\taudit\tfees 30\t000 30\t000 0 [1] 30\t000 Interest\tpayable 6\t000 6\t000 0 [1] 6\t000 Provision\temp\tbenefits 170\t000 170\t000 0 [1] 170\t000 Unearned\trent\trevenue 15\t000 15\t000 0 [2] 15\t000 Total\tTemporary\tDiffs 45\t000 221\t000 Deferred\ttax\tliability 30% Deferred\ttax\tasset\t30% 13\t500 66\t300 Assets Liabilities Carrying Future Amount Deductible Amount Tax\tBase Taxable Temporar y Difference s 11 The increase in the deferred tax asset for 2016-2017 is attributable to the following Increase\tin\taccrued\taudit\tfees 5\t000 Increase\tin\tprovision\tfor\temployee\tbenefits 10\t000 Increase\tin\tunearned\trent\trevenue 5\t000 Decrease\tin\tinterest\tpayable (5\t000) 15\t000\tx\t30%\t=\t$4\t500 The\tincrease\tin\tthe\tdeferred\ttax\tliability\tfor\t2016-2017\tis\tattributable\tto\tthe following: Increase\tin\tthe\tdifference\tbetween\ttax and\taccounting\twritten\tdown\tvalue\tof\tplant\t17\t500 Decrease\tin\tinterest\treceivable (5\t000) 12\t500\tx\t30%\t=\t$3\t750 12 Tut\t4 Question\t12.2 Accounting\tat\tacquisition\tdate\tby\tthe\tacquirer On 1 July 2016, Brad Ltd acquired all of the assets and liabilities of Pitt Ltd. In exchange for these assets and liabilities, Brad Ltd issued 100 000 shares that at date of issue had a fair value of $5.20 per share. Costs of issuing these shares amounted to $1000. Legal costs associated with the acquisition of Pitt Ltd amounted to $1200. The asset and liabilities of Pitt Ltd at 1 July 2016 were as follows: Carrying\tamount Fair\tvalue Assets Cash $2\t000 $2\t000 Accounts\treceivable 10\t000 10\t000 Inventory 64\t000 68\t000 Equipment 320\t000 232\t000 Accumulated\tdepreciation\t-\tequipment(96\t000) Patents 240\t000 280\t000 Liabilities Accounts\tpayable (16\t000) (16\t000) Debentures (64\t000) (64\t000) Required A. Prepare the acquisition analysis at 1 July 2016 for the acquisition of Pitt Ltd by Brad Ltd. B. Prepare the journal entries in the records of Brad Ltd at 1 July 2016. C. Prepare the journal entries in the records of Brad Ltd assuming that the shares issued by Brad Ltd had a fair value of $4.80. A.\tAcquisition\tanalysis: Net\tfair\tvalue\tof\tidentifiable\tassets\tand\tliabilities\tacquired: Patents $280\t000 Equipment 232\t000 Inventory 68\t000 Cash 2\t000 Accounts\treceivable 10\t000 592\t000 Accounts\tpayable (16\t000) Debentures (64\t000) (80\t000) Net\tassets $512\t000 Consideration\ttransferred:\t100\t000\tshares\tat\t$5.20\teach $520\t000 Goodwill\t=\t$520\t000\t-\t$512\t000 = $8\t000 B.\tJournal\tentries\tin\trecords\tof\tBrad\tLtd\tat\t1\tJuly\t2016: Patents Dr 280\t000 Equipment Dr 232\t000 Inventory Dr 68\t000 13 Cash Dr 2\t000 Accounts\treceivable Dr 10\t000 Goodwill Dr 8\t000 Accounts\tpayable Cr 16\t000 Debentures Cr 64\t000 Share\tcapital Cr 520\t000 (Acquisition\tof\tthe\tassets\tand\tliabilities\tof\tPitt\tLtd) Share\tcapital Dr 1\t000 Cash Cr 1\t000 (Costs\tof\tshare\tissue) Acquisition\texpenses Dr 1\t200 Cash Cr 1\t200 (Costs\tassociated\twith\tthe\tacquisition\tof\tPitt\tLtd) C.\tJournal\tentries\tin\trecords\tof\tPitt\tLtd\tif\tFV\tof\tshares\t=\t$4.80 Fair\tvalue\tof\tacquiree's\tnet\tassets $512\t000 Consideration\ttransferred:\t100\t000\tx\t$4.80 $480\t000 Gain\ton\tbargain\tpurchase $32\t000 The\tonly\tentry\tthat\tchanges\tfrom\tPart\tB\tis: Patents Dr 280\t000 Equipment Dr 232\t000 Inventory Dr 68\t000 Cash Dr 2\t000 Accounts\treceivable Dr 10\t000 Accounts\tpayable Cr 16\t000 Loans Cr 64\t000 Share\tcapital Cr 480\t000 Gain\ton\tbargain\tpurchase Cr 32\t000 Question 13.4 Cash-generating unit, goodwill Crossbow Ltd is an entity that specialises in the manufacture of leather footwear for women. It has aggressively undertaken a strategy of buying out other companies that had competing products. These companies were liquidated and the assets and liabilities brought into Crossbow Ltd. At 30 June 2015, Crossbow Ltd reported the following assets in its statement of financial position: Cash $20\t000 Leather\tand\tother\tinventory\tproducts 180\t000 Brand\t'Crossbow\tShoes' 160\t000 Shoe\tfactory\tat\tcost 820\t000 Accumulated\tdepreciation\t-\tfactory (120\t000) Machinery\tfor\tmanufacturing\tshoes 640\t000 Accumulated\tdepreciation\t-\tmachinery (240\t000) Goodwill\ton\tacquisition\tof\tcompeting\tcompanies40\t000 $1\t500\t000 14 Because of the competition from overseas as customers pursue a strategy of buying online rather than visit Crossbow Ltd's stores, Crossbow Ltd assessed its impairment position at 30 June 2015. The indicators suggested that an impairment loss was probable. Crossbow Ltd calculated a recoverable amount of its company of $1 420 000. Required Prepare the journal entry(ies) for any impairment loss occurring at 30 June 2015. Carrying amount of assets Recoverable amount Impairment loss = = = $1 500 000 $1 420 000 $80 000 The\timpairment\tloss\tis\tfirstly\tused\tto\twrite\toff\tthe\tgoodwill\tof\t$40\t000. The\tbalance\tof\tthe\tloss,\t$40\t000,\tis\tallocated\tacross\tthe\tother\tassets,\texcept\tfor cash\tand inventory,\tassuming\tit\tis\trecorded\tat\tthe\tlower\tof\tcost\tand\tnet realisable\tvalue: Carrying Proportion Allocation Net\tCarrying Amount of\tLoss Amount Brand 160\t000 16/126 5\t079 154\t921 Factory 700\t000 70/126 22\t222 677\t778 Machinery 400\t000 40/126 12\t699 387\t301 1\t260\t000 40\t000 The\tjournal\tentry\tto\trecord\tthe\timpairment\tloss\tis: Impairment\tloss Dr 80\t000 Goodwill Cr 40\t000 Accumulated\tamortisation\tand impairment\tlosses\t-\tbrand Cr 5\t079 Accumulated\tdepreciation\tand impairment\tlosses\t-factory Cr 22\t222 Accumulated\tdepreciation\tand impairment\tlosses\t-machinery Cr 12\t699 (Allocation\tof\timpairment\tloss) 15 Tut\t5 Question\t19.9 acquisition Business\tcombination\tvaluation\tentries,\tpre entries\tfor\tmultiple\tyears Barry\tLtd\tacquired\tall\tthe\tissued\tshares\tof\tColin\tLtd\ton\t1\tJanuary\t2016\tfor\t$72 000.\tAt\tthis\tdate\tthe\tequity\tof\tColin\tLtd\tconsisted\tof: Share\tcapital $\t50\t000 General\treserve 12\t500 Retained\tearnings 5\t000 All\tthe\tidentifiable\tassets\tand\tliabilities\tof\tColin\tLtd\twere\trecorded\tat\tamounts equal\tto\ttheir\tfair\tvalues\texcept\tfor: Carrying\tamount Fair\tvalue Plant\t(cost\t$70\t000) $50\t000 $52\t000 Inventory 12\t000 16\t000 Of\tthe\tinventory\ton\thand\tat\t1\tJanuary\t2016,\t90%\twas\tsold\tby\t30\tJune\t2016.\tThe remainder\twas\tall\tsold\tby\t30\tJune\t2017.\tThe\tplant\twas\tconsidered\tto\thave\ta further\t2-year\tlife\twith\tbenefits\tto\tbe\treceived\tequally\tin\teach\tof\tthose\tyears.\tThe tax\trate\tis\t30%. Required Prepare\tthe\tconsolidated\tworksheet\tentries\tfor\tthe\tconsolidated\tfinancial statements\tprepared\tby\tBarry\tLtd\tat\t30\tJune\t2016,\t30\tJune\t2017,\tand\t30\tJune 2018. Acquisition\tanalysis\tat\t1\tJanuary\t2016: Fair\tvalue\tof\tidentifiable\tassets and\tliabilities\tof\tColin\tLtd = $50\t000\t+\t$12\t500\t+\t$5\t000 +\t$4\t000\t(1\t-\t30%)\t(BCVR\t-\tinventory) +\t$2\t000\t(1\t-\t30%)\tBCVR\t-\tplant) = $71\t700 Consideration\ttransferred = $72\t000 Goodwill = $300 1.\tWorksheet\tentries\tat\t30\tJune\t2016 Business\tcombination\tvaluation\tentries Accumulated\tdepreciation Dr 20\t000 Plant Cr 18\t000 Deferred\ttax\tliability Cr 600 Business\tcombination\tvaluation\treserve Cr 1\t400 Depreciation\texpense Dr 500 Accumulated\tdepreciation Cr 500 (1/2 x\t$1\t000\tp.a.) Deferred\ttax\tliability Dr 150 Income\ttax\texpense Cr 150 16 (30%\tx\t$500) Cost\tof\tsales Dr 3\t600 Income\ttax\texpense Cr 1\t080 Transfer\tfrom\tbusiness\tcombination valuation\treserve Cr 2\t520 This\tentry\trelates\tto\tthe\t90%\tof\tthe\tinventory\tthat\thas\tbeen\tsold\tby\t30\tJune\t2016. Inventory Dr 400 Deferred\ttax\tliability Cr 120 Business\tcombination\tvaluation\treserve Cr 280 This\tentry\trelates\tto\tthe\t10%\tof\tthe\tinventory\tstill\ton\thand\tat\t30\tJune\t2016. Goodwill Dr 300 Business\tcombination\tvaluation\tentry Cr 300 Pre-acquisition\tentries Retained\tearnings\t(1/1/16) Dr 5\t000 Share\tcapital Dr 50\t000 Reserves Dr 12\t500 Business\tcombination\tvaluation\treserve Dr 4\t500 Shares\tin\tColin\tLtd Cr 72\t000 Transfer\tfrom\tbusiness\tcombination\tval'n\treserve Dr 2\t520 Business\tcombination\tvaluation\treserve Cr 2\t520 2.\tWorksheet\tentries\tat\t30\tJune\t2017 Business\tcombination\tvaluation\tentries Accumulated\tdepreciation Dr 20\t000 Plant Cr 18\t000 Deferred\ttax\tliability Cr 600 Business\tcombination\tvaluation\treserve Cr 1\t400 Depreciation\texpense Dr 1\t000 Retained\tearnings\t(1/7/16) Dr 500 Accumulated\tdepreciation Cr 1\t500 Deferred\ttax\tliability Dr 450 Income\ttax\texpense Cr 300 Retained\tearnings\t(1/7/16) Cr 150 (30%\tx\tamounts\tin\tabove\tdepreciation\tentry) Cost\tof\tsales Dr 400 Income\ttax\texpense Cr 120 Transfer\tfrom\tbusiness\tcombination valuation\treserve Cr 280 Goodwill Dr 300 Business\tcombination\tvaluation\tentry Cr 300 Pre-acquisition\tentries 17 Retained\tearnings\t(1/7/16) Share\tcapital Reserves Business\tcombination\tvaluation\treserve Shares\tin\tColin\tLtd Transfer\tfrom\tbusiness\tcombination\tval'n\treserve Business\tcombination\tvaluation\treserve 3.\tWorksheet\tentries\tat\t30\tJune\t2018 Business\tcombination\tvaluation\tentries Depreciation\texpense Income\ttax\texpense Retained\tearnings\t(1/7/17) Transfer\tfrom\tbusiness\tcombination valuation\treserve Goodwill Business\tcombination\tvaluation\tentry Pre-acquisition\tentries Retained\tearnings\t(1/7/17)\t* Share\tcapital Reserves Business\tcombination\tvaluation\treserve Shares\tin\tColin\tLtd *\t5\t000\t+\t$4\t000(1\t-30%) Transfer\tfrom\tbusiness\tcombination\tval'n\treserve Business\tcombination\tvaluation\treserve Dr Dr Dr Dr Cr 7\t520 50\t000 12\t500 1\t980 72\t000 Dr Cr 280 280 Dr Cr Dr 500 1\t050 150 Cr 1\t400 Dr Cr 1\t300 1\t300 Dr Dr Dr Dr Cr 7\t800 50\t000 12\t500 1\t700 72\t000 Dr Cr 1\t400 1\t400 18 Tut6 Question\t20.3 Intragroup\ttransactions Dingo\tLtd\towns\tall\tof\tthe\tshares\tof\tBilby\tLtd.\tIn\trelation\tto\tthe\tfollowing intragroup\ttransactions,\tall\tparts\tof\twhich\tare\tindependent\tunless\tspecified, prepare\tthe\tconsolidation\tworksheet\tadjusting\tentries\tfor\tpreparation\tof\tthe consolidated\tfinancial\tstatements\tas\tat\t30\tJune\t2016. Assume\tan\tincome\ttax\trate\tof\t30%. (a) On\t1\tJanuary\t2015,\tDingo\tLtd\tsold\tinventory\tcosting\t$6000\tto\tBilby\tLtd\tat\ta transfer\tprice\tof\t$8000.\tOn\t1\tSeptember\t2015,\tBilby\tLtd\tsold\thalf\tthese\titems of\tinventory\tback\tto\tDingo\tLtd,\treceiving\t$3000\tfrom\tDingo\tLtd.\tOf\tthe remaining\tinventory\tkept\tby\tBilby\tLtd,\thalf\twas\tsold\tin\tJanuary\t2016\tto Goanna\tLtd\tat\ta\tloss\tof\t$200. (b) On\t1\tJanuary\t2016,\tBilby\tLtd\tsold\tan\titem\tof\tplant\tto\tDingo\tLtd\tfor\t$2000. Immediately\tbefore\tthe\tsale,\tBilby\tLtd\thad\tthe\titem\tof\tplant\ton\tits\taccounts\tfor $3000.\tBilby\tLtd\tdepreciated\titems\tat\t5%\tp.a.\ton\tthe\tdiminishing\tbalance\tand Dingo\tLtd\tused\tthe\tstraight-line\tmethod\tover\t10\tyears. (c) On\t1\tJuly\t2015,\tDingo\tLtd\tsold\ta\tmotor\tvehicle\tto\tBilby\tLtd\tfor\t$12\t000.\tThis had\ta\tcarrying\tamount\tto\tDingo\tLtd\tof\t$9600.\tBoth\tentities\tdepreciate\tmotor vehicles\tat\ta\trate\tof\t10%\tp.a.\ton\tcost. (d) During\tthe\t2014-15\tperiod,\tDingo\tLtd\tsold\tinventory\tto\tBilby\tLtd\tfor\t$9000, recording\ta\tbefore-tax\tprofit\tof\t$1800.\tHalf\tthis\tinventory\twas\tunsold\tby\tBilby Ltd\tat\t30\tJune\t2015. (e) Bilby\tLtd\tsells\tsecond-hand\tmachinery.\tDingo\tLtd\tsold\tone\tof\tits\tdepreciable assets\t(original\tcost\t$80\t000,\taccumulated\tdepreciation\t$64\t000)\tto\tBilby\tLtd for\t$10\t000\ton\t1\tJanuary\t2016.\tBilby\tLtd\thad\tnot\tresold\tthe\titem\tby\t30\tJune 2016. (f) On\t1\tMay\t2016,\tBilby\tLtd\tsold\tinventory\tcosting\t$300\tto\tDingo\tLtd\tfor\t$360\ton credit.\tOn 30\tJune\t2016,\tonly\thalf\tof\tthese\tgoods\thad\tbeen\tsold\tby\tDingo\tLtd,\tbut\tDingo Ltd\thad\tpaid $280\tback\tto\tBilby\tLtd. (a) Retained\tearnings\t(1/7/15) Dr 1\t400 Income\ttax\texpense Dr 600 Sales\trevenue Dr 3\t000 Cost\tof\tsales\t(4000\t+\t500) Cr 4\t500 Inventory\t(1/4\tx\t2000) Cr 500 Deferred\ttax\tasset Dr 150 Income\ttax\texpense Cr 150 (b) OR Plant Proceeds\ton\tsale\tof\tplant Carrying\tamount\tof\tplant\tsold Dr Dr Cr 1\t000 2\t000 3\t000 Plant Loss\ton\tsale\tof\tplant Dr Cr 1\t000 1\t000 19 Income\ttax\texpense Deferred\ttax\tliability Dr Cr 300 300 Depreciation\texpense Accumulated\tdepreciation (10%\tx\t$1000\tx\t\tyear) Dr Cr 50 50 Deferred\ttax\tliability Income\ttax\texpense Dr Cr 15 15 Proceeds\ton\tsale\tof\tmotor\tvehicle Carrying\tamount\tof\tmotor\tvehicle\tsold Motor\tvehicles Dr Cr Cr 12\t000 9\t600 2\t400 Gain\ton\tsale\tof\tvehicles Motor\tvehicles Dr Cr 2\t400 2\t400 Deferred\ttax\tasset Income\ttax\texpense Dr Cr 720 720 Accumulated\tdepreciation Depreciation\texpense (10%\tx\t2\t400\tp.a.) Dr Cr 240 240 Income\ttax\texpense Deferred\ttax\tasset Dr Cr 72 72 Retained\tearnings\t(1/7/15) Income\ttax\texpense Cost\tof\tsales Dr Dr Cr 630 270 900 Inventory Proceeds\ton\tsale\tof\tmachinery Carrying\tamount\tof\tmachinery\tsold Dr Dr Cr 6\t000 10\t000 16\t000 Inventory Loss\ton\tsale\tof\tmachinery Dr Cr 6\t000 6\t000 Income\ttax\texpense Deferred\ttax\tliability Dr Cr 1\t800 1\t800 Sales\trevenue Cost\tof\tsales Inventory Dr Cr Cr 360 330 30 Deferred\ttax\tasset Income\ttax\texpense Dr Cr 9 9 Accounts\tpayable Accounts\treceivable Dr Cr 80 80 (c) OR (d) (e) OR (f) 20 Tut\t7 Question\t21.6 worksheet Partial\tgoodwill\tmethod,\tconsolidation Barren\tLtd\tacquired\t75%\tof\tthe\tshares\tof\tGoose\tLtd\tfor\t$191\t000\ton\t1\tJuly\t2016. At\tthis\tdate\tthe\tequity\tof\tGoose\tLtd\tconsisted\tof: Share\tcapital $\t80\t000 General\treserve 48\t000 Retained\tearnings 32\t000 At\tthis\tdate\tall\tthe\tidentifiable\tassets\tand\tliabilities\tof\tGoose\tLtd\twere\trecorded at\tamounts\tequal\tto\ttheir\tfair\tvalues\texcept\tfor: Carrying Fair amount value Plant\t(cost\t$156\t000) $130\t000 $140\t000 Inventory 100\t000 130\t000 Brands 40\t000 120\t000 The\tplant\twas\tconsidered\tto\thave\ta\tfurther\tuseful\tlife\tof\t10\tyears.\tThe\tbrands have\tan\tindefinite\tlife.\tThe\tinventory\twas\tall\tsold\tby\t30\tJune\t2017.\tThe\ttax\trate\tis 30%.\tBarren\tLtd\tuses\tthe\tpartial\tgoodwill\tmethod. An\timpairment\ttest\twas\tconducted\tin\tJune\t2017\tresulting\tin\tthe\twrite\toff\tof\tall the\tgoodwill\tof\tGoose\tLtd\tand\t$20\t000\tfrom\tthe\tbrands. Financial\tinformation\tprovided\tby\tthe\ttwo\tcompanies\tat\t30\tJune\t2019\twas\tas follows: Barren Goose Ltd Ltd Sales $400\t000 $64\t000 Cost\tof\tsales (170\t000) (28\t000) Gross\tprofit 230\t000 36\t000 Expenses (60\t000) (5\t600) Profit\tbefore\tincome\ttax 170\t000 30\t400 Income\ttax\texpense (40\t000) (4\t000) Profit\tfor\tthe\tyear 130\t000 26\t400 Retained\tearnings 95\t000 60\t000 (1/7/18) Retained\tearnings 225\t000 86\t400 (30/6/19) Share\tcapital 300\t000 80\t000 General\treserve 50\t000 64\t000 Total\tequity 575\t000 230\t400 Current\tliabilities $ 40\t000 $ 3\t600 Deferred\ttax\tliabilities 20\t000 6\t000 Total\tliabilities 60\t000 9\t600 Total\tequity\tand\tliabilities $635\t000 $240\t000 Plant $340\t000 $152\t000 Accumulated\tdepreciation (100\t000) (19\t200) -\tplant 21 Brands Shares\tin\tGoose\tLtd Inventory Total\tassets 80\t000 40\t000 191\t000 0 124\t000 67\t200 $635\t000 $240\t000 Required Prepare\tthe\tconsolidated\tfinancial\tstatements\tof\tBarren\tLtd\tat\t30\tJune\t2019. 75% Barren\tLtd Goose\tLtd Barren\tLtd\t75% NCI 25% Pre-acquisition\tanalysis At\t1\tJuly\t2016: Net\tfair\tvalue\tof\tidentifiable assets\tand\tliabilities\tof\tGoose\tLtd = ($80\t000\t+\t$48\t000\t+\t$32\t000)\t(equity) +\t$10\t000\t(1\t-\t30%)\t(plant) +\t$80\t000\t(1\t-\t30%)\t(brands) +\t$30\t000\t(1\t-\t30%)\t(inventory) = $244\t000 (a) Consideration\ttransferred = $191\t000 (b) Non-controlling\tinterest = 25%\tx\t$244\t000 = $61\t000 Aggregate\tof\t(a)\tand\t(b) = $252\t000 Goodwill:\tparent\tonly = $252\t000\t-\t$244\t000 = $8\t000 A.\tConsolidation\tworksheet\tentries\tat\t30\tJune\t2019 1.\tBusiness\tcombination\tvaluation\tentries Accumulated\tdepreciation\t-\tplant Dr 26\t000 Plant Cr 16\t000 Deferred\ttax\tliability Cr 3\t000 Business\tcombination\tvaluation\treserve Cr 7000 Depreciation\texpense Dr 1\t000 Retained\tearnings\t(1/7/18) Dr 2\t000 Accumulated\tdepreciation Cr 3\t000 (1/10\tx\t$10\t000\tp.a.\tfor\t3\tyears) Deferred\ttax\tliability Dr 900 Income\ttax\texpense Cr 300 Retained\tearnings\t(1/7/18) Cr 600 Brands Dr 80\t000 Deferred\ttax\tliability Cr 24\t000 Business\tcombination\tvaluation\treserve Cr 56\t000 Retained\tearnings\t(1/7/18) Dr 20\t000 Accumulated\timpairment\tlosses\t-\tbrands Cr 20\t000 Deferred\ttax\tliability Dr 6\t000 22 Retained\tearnings\t(1/7/18) Cr 2.\tPre-acquisition\tentries Retained\tearnings\t(1/7/18)\t* Dr 47\t750 Share\tcapital Dr 60\t000 General\treserve Dr 36\t000 Business\tcombination\tvaluation\treserve Dr 47\t250 Shares\tin\tGoose\tLtd Cr *\t=\t$24\t000\t+\t$8\t000\tgoodwill\t+\t75%\tx\t$21\t000\t(BCVR\t-\tinventory) 3.\tNCI\tin\tequity\tat\t1/7/16 Retained\tearnings\t(1/7/18) Dr 8\t000 Share\tcapital Dr 20\t000 General\treserve Dr 12\t000 Business\tcombination\tvaluation\treserve Dr 21\t000 NCI Cr (25%\tof\tbalances\tat\t1/7/16) 4.\tNCI\tin\tequity:\t1/7/16\t-\t30/6/18 Retained\tearnings\t(1/7/18) Dr 3\t150 General\treserve Dr 4\t000 Business\tcombination\tvaluation\treserve Cr NCI Cr RE:\t25%\t($60\t000\t-\t$32\t000\t-\t($2\t000\t-\t$600)\t-\t($20\t000\t-\t$6\t000)) GR:\t25%\t($64\t000\t-\t$48\t000) BCVR:\t25%\tx\t$21\t000\t(BCVR\tinventory) 5. NCI\tin\tequity:\t1/7/18\t-\t30/6/19 NCI\tshare\tof\tprofit Dr 6\t425 NCI Cr (25%\t($26\t400-\t($1\t000\t-\t$300))) 6\t000 191\t000 61\t000 5\t250 1\t900 6\t425 QUESTION\t21.6\t(cont'd) BARREN\tLTD Consolidated\tStatement\tof\tProfit\tor\tLoss\tand\tOther\tComprehensive\tIncome for\tthe\tyear\tended\t30\tJune\t2019 Revenues: Sales\trevenue $464\t000 Expenses: Cost\tof\tsales 198\t000 Other\texpenses 66\t600 264\t600 Profit\tbefore\tincome\ttax 199\t400 Income\ttax\texpense 43\t700 Profit\tfor\tthe\tperiod 155\t700 Attributable\tto: Parent\tshareholders 149\t275 23 Non-controlling\tinterest BARREN\tLTD Consolidated\tStatement\tof\tChanges\tin\tEquity for\tthe\tyear\tended\t30\tJune\t2019 Comprehensive\tincome\tfor\tthe\tperiod Non-controlling\tinterest Parent\tshareholders 6\t425 $155\t700 $155\t700 $6\t425 $149\t275 Group Parent $91\t850 155\t700 $247\t550 $80\t700 149\t275 $229\t975 $15\t750 $15\t750 0 0 Share\tcapital: Balance\tat\t1\tJuly\t2018 Balance\tat\t30\tJune\t2019 $320\t000 $320\t000 $300\t000 $300\t000 General\treserve: Balance\tat\t1\tJuly\t2018 Balance\tat\t30\tJune\t2019 $78\t000 $78\t000 $62\t000 $62\t000 Retained\tearnings: Balance\tat\t1\tJuly\t2018 Profit\tfor\tthe\tperiod Balance\tat\t30\tJune\t2019 Business\tcombination\tvaluation\treserve: Balance\tat\t1\tJuly\t2018 Balance\tat\t30\tJune\t2019 BARREN\tLTD Consolidated\tStatement\tof\tFinancial\tPosition as\tat\t30\tJune\t2019 ASSETS Current\tAssets Inventory Non-current\tAssets: Property,\tplant\tand\tequipment Plant Accumulated\tdepreciation Brands Accumulated\timpairment\tlosses Total\tNon-current\tAssets Total\tAssets EQUITY\tAND\tLIABILITIES Equity\tattributable\tto\towners\tof\tthe\tparent: Share\tcapital Other\treserves:\tGeneral\treserve Retained\tearnings Parent\tInterest Non-controlling\tInterest Total\tEquity Current\tLiabilities Non-current\tLiabilities $476\t000 (96\t200) 200\t000 (20\t000) 379\t800 180\t000 559\t800 $751\t000 $300\t000 62\t000 229\t925 591\t925 69\t375 661\t300 43\t600 24 $191\t20 Deferred\ttax\tliabilities Total\tLiabilities Total\tEquity\tand\tLiabilities 46\t100 89\t700 $751\t000 25 Tut8 Question\t22.3 subsidiaries Consolidation\tworksheet\tentries,\tmultiple On 1 July 2014, Laos Ltd acquired 70% of the shares of Maldives Ltd for $100 000 and Maldives Ltd acquired 60% of Malaysia Ltd for $70 000. The equity of the companies at 1 July 2014 was: Maldives Ltd Share capital Retained earnings $ 100 000 40 000 Malaysia Ltd $ 80 000 30 000 At 1 July 2014, all the identifiable assets and liabilities of both Maldives Ltd and Malaysia Ltd were recorded at fair value. At 30 June 2017, the financial data of the three companies were as follows: Sales revenue Other revenue Total revenues Cost of sales Other expenses Total expenses Profit before income tax Income tax expense Profit for the period Retained earnings (1/7/16) Total available for appropriation Dividend paid Retained earnings (30/6/17) Share capital Net assets Laos Ltd 120 000 60 000 180 000 90 000 60 000 150 000 30 000 8 000 22 000 55 000 77 000 15 000 62 000 148 000 $ 210 000 $ Maldives Ltd $ 102 000 44 000 146 000 80 000 41 000 121 000 25 000 8 000 17 000 46 000 63 000 10 000 53 000 100 000 $ 153 000 Malaysia Ltd $ 84 000 36 000 120 000 72 000 26 000 98 000 22 000 5 000 17 000 25 000 42 000 5 000 37 000 80 000 $ 117 000 Since 1 July 2014, the following transactions have occurred between the three companies: During the current year, Maldives Ltd sold inventory valued at $20 000 to Laos Ltd, this having cost Maldives Ltd $15 000. Half of this inventory is still on hand at 30 June 2017. On 1 July 2016, Malaysia Ltd sold a motor vehicle to Maldives Ltd for $25 000. The carrying amount of the vehicle at the date of sale was $23 000. Vehicles are depreciated at 30% p.a. on a straight-line basis. The company tax rate is 30%. Required Prepare the consolidation worksheet journal entries for the year ended 30 June 2017. Laos\tLtd 70% 60% Maldives\tLtd DNCI 30% Malaysia\tLtd DNCI 40% 26 INCI 18% Acquisition analysis: Laos Ltd - Maldives Ltd At\t1\tJuly\t2014: Net\tfair\tvalue\tof\tidentifiable\tassets and\tliabilities\tof\tMaldives\tLtd = $100\t000\t+\t$40\t000 = $140\t000 (a)\tConsideration\ttransferred = $100\t000 (b)\tNon-controlling\tinterest = 30%\tx\t$140\t000 = $42\t000 Aggregate\tof\t(a)\tand\t(b) = $142\t000 Goodwill = $2\t000 1.\tPre-acquisition\tentry\t-\t30\tJune\t2017 Retained\tearnings\t(1/7/16) Dr 28\t000 Share\tcapital Dr 70\t000 Goodwill Dr 2\t000 Shares\tin\tMaldives\tLtd Cr 100\t000 2.\tNCI\tshare\tof\tequity\tin\tMaldives\tLtd\tat\t1/7/14 Retained\tearnings\t(1/7/16) Dr 12\t000 Share\tcapital Dr 30\t000 NCI Cr 42\t000 3.\tNCI\tshare\tof\tequity\tin\tMaldives\tLtd:\t1/7/14\t-\t30/6/16 Retained\tearnings\t(1/7/16) Dr 1\t800 NCI Cr 1\t800 (30%\t($46\t000\t-\t$40\t000)) 4.\tNCI\tshare\tof\tequity\tin\tMaldives\tLtd:\t1/7/16\t-\t30/6/17 NCI\tshare\tof\tprofit Dr 5\t100 NCI Cr 5\t100 (30%\tx\t$17\t000) NCI Dr 3\t000 Dividend\tpaid Cr 3\t000 (30%\tx\t$10\t000) NCI Dr 900 NCI\tshare\tof\tprofit Cr 900 (30%\tx\t60%\tx\t$5\t000) Acquisition analysis: Maldives Ltd - Malaysia Ltd At\t1\tJuly\t2014: 27 Net\tfair\tvalue\tof\tidentifiable\tassets and\tliabilities\tof\tMalaysia\tLtd = $80\t000\t+\t$30\t000 = $110\t000 (a) Consideration\ttransferred = $70\t000 (b) Non-controlling\tinterest = 40%\tx\t$110\t000 = $44\t000 Aggregate\tof\t(a)\tand\t(b) = $114\t000 Goodwill = $4\t000 5.\tPre-acquisition\tentry\t-\t30\tJune\t2017 Retained\tearnings\t(1/7/16) Dr 18\t000 Share\tcapital Dr 48\t000 Goodwill Dr 4\t000 Shares\tin\tMalaysia\tLtd Cr 6.\tNCI\tshare\tof\tequity\tin\tMalaysia\tLtd\tat\t1/7/14 Retained\tearnings\t(1/7/16) Dr 12\t000 Share\tcapital Dr 32\t000 NCI Cr 7.\tNCI\tshare\tof\tequity\tin\tMalaysia\tLtd:\t1/7/14\t-\t30/6/16 NCI Dr 2\t000 Retained\tearnings\t(1/7/16) Cr (40%\t($25\t000\t-\t$30\t000)) NCI Dr 900 Retained\tearnings\t(1/7/16) Cr (18%\t($25\t000\t-\t$18\t000/0.6)) 8.\tNCI\tshare\tof\tequity\tin\tMalaysia\tLtd:\t1/7/16\t-\t30/6/17 NCI\tshare\tof\tprofit Dr 6\t800 NCI Cr (40%\tx\t$17\t000) NCI\tshare\tof\tprofit Dr 3\t060 NCI Cr (18%\tx\t$17\t000) NCI Dr 2\t000 Dividend\tpaid Cr (40%\tx\t$5\t000) 9.\tDividend\tpaid Maldives\tLtd: 70%\tx\t$10\t000\t=\t$7\t000 Malaysia\tLtd: 60%\tx\t$5\t000\t=\t$3\t000 Dividend\trevenue Dr 10\t000 70\t000 44\t000 2\t000 900 6\t800 3\t060 2\t000 28 Dividend\tpaid Cr 10.\tSale\tof\tinventory:\tMaldives\tLtd\t-\tLaos\tLtd Sales Dr 20\t000 Cost\tof\tsales Cr Inventory Cr Deferred\ttax\tasset Dr 750 Income\ttax\texpense Cr 11.\tNCI\tadjustment NCI Dr 525 NCI\tshare\tof\tprofit Cr (30%\tx\t$1\t750) 12.\tSale\tof\tmotor\tvehicle:\tMalaysia\tLtd\t-\tMaldives\tLtd Proceeds\ton\tsale\tof\tmotor\tvehicle Dr 25\t000 Carrying\tamount\tof\tvehicle Cr Motor\tvehicle Cr Deferred\ttax\tasset Dr 600 Income\ttax\texpense Cr 13.\tNCI\tadjustment NCI Dr 812 NCI\tshare\tof\tprofit Cr ((40%\t+\t18%)\t($2\t000\t-\t$600)) 14.\tDepreciation Accumulated\tdepreciation Dr 600 Depreciation\texpense Cr (30%\tx\t$2\t000) Income\ttax\texpense Dr 180 Deferred\ttax\tasset Cr 15.\tNCI\tadjustment NCI\tshare\tof\tprofit Dr 244 NCI Cr ((40%\t+\t18%)\t($600-$180)) 10\t000 17\t500 2\t500 750 525 23\t000 2\t000 600 812 600 180 244 29 Tut\t9 Question\t17.6 Different\tfunctional\tcurrencies On 1 July 2016, an Australian company, Toowoomba Ltd, acquired all the issued capital of a Swedish company, Stockholm Ltd, for $997 400. At the date of acquisition, the equity of Stockholm Ltd consisted of: Krona (K) Share capital 800 000 General reserve 200 000 Retained earnings 635 000 The internal financial statements of Stockholm Ltd at 30 June 2017 are shown below. Statement of Profit or Loss and Other Comprehensive Income K K Revenues 2 585 000 Cost of sales: Opening stock 600 000 Purchases 1 800 000 2 400 000 Closing stock 580 000 1 820 000 Gross profit 765 000 Expenses: Depreciation 125 000 Other 270 000 395 000 Profit before income tax 370 000 Income tax expense 200 000 Profit for the period 170 000 Retained earnings as at 1 July 2016 635 000 805 000 Dividend paid 100 000 Retained earnings as at 30 June 2017 705 000 Statement of Financial Position 1/7/16 K 500 000 600 000 1 100 000 300 000 700 000 (100 000) 800 000 (235 000) 1 465 000 2 565 000 350 000 30/6/17 K Current assets Cash and receivables Inventory Total current assets Non-current assets Land Buildings Accumulated depreciation Plant Accumulated depreciation Total non-current assets Total assets Current liabilities Non-current liabilities 500 000 580 000 1 080 000 300 000 700 000 (130 000) 900 000 (330 000) 1 440 000 2 520 000 235 000 30 580 000 930 000 1 635 000 800 000 200 000 635 000 1 635 000 Notes - issued September 2016 580 000 Total liabilities 815 000 Net assets 1 705 000 Equity Share capital 800 000 General reserve 200 000 Retained earnings 705 000 Total equity 1 705 000 Additional information 1. Exchange rates for the Swedish krona were as follows: 1 krona = $A 0.54 0.52 0.52 0.50 0.51 1 July 2016 Average 2016-17 January 2017 30 June 2017 Average for the last 4 months of the 2016- 17 period 2. Stockholm Ltd acquired additional plant for K100 000 on 1 January 2017 by issuing a note for K80 000 and paying the balance in cash. 3. Sales, purchases and other expenses were incurred evenly through the year. 4. Depreciation for the period in krona was as follows: Buildings $30 000 Plant - acquired before 1 July 2016 85 000 - acquired 1 January 2017 10 000 5. The inventory is valued on a FIFO basis. The opening stock was acquired when the exchange rate was 0.54, and the closing stock was acquired during the last 4 months of the 2016-17 period. 6. Dividends of K50 000 were paid on 2 July 2016 and 1 January 2017. 7. The tax rate for Stockholm Ltd is 25%. Required 1. Translate the accounts of the foreign subsidiary, Stockholm Ltd, into Australian dollars at 30 June 2017, assuming: (a) the functional currency is the Swedish krona, and the presentation currency is the Australian dollar (b) the functional currency is the Australian dollar, as is the presentation currency. 2. Verify the translation adjustments in requirement 1. 1.\tTranslation\tof\taccounts (a)\tTranslation\tfrom\tfunctional\tcurrency\t(K)\tto\tpresentation\tcurrency\t($A) K'000 K'000 K'000 $'000 Revenue 2\t585 0.52 1\t344 Cost\tof\tsales: 31 Opening\tstock 600 Purchases 1\t800 2\t400 Closing\tstock 580 Cost\tof\tsales 1\t820 Gross\tprofit 765 Depreciation 125 Other\texpenses 270 395 370 Income\ttax\texpense 200 Profit\tfor\tthe\tperiod 170 Retained\tearnings\tas\tat\t1/7/016 635 805 Dividend\tpaid 50 50 100 Retained\tearnings\tas\tat\t30/6/17 705 Share\tcapital 800 General\treserve 200 Foreign\tCurrency\tTranslation Reserve ____ $1\t705 Cash\t&\treceivables 500 Inventory 580 Land 300 Buildings 700 Accumulated\tdepreciation (130) Plant 900 Accumulated\tdepreciation (330) 2\t520 Current\tliabilities 235 Notes 580 815 Net\tassets $1\t705 2\t(a)\tProof\tof\tForeign\tCurrency\tTranslation\tReserve Change\tin\tnet\tinvestment Opening\tnet\tassets = Opening\tnet\tassets\tx\tending\texchange\trate = = Opening\tnet\tassets\tx\tbeginning\texchange\trate = = Translation\tloss = Income\tstatement\titems 0.54 0.52 0.51 0.52 0.52 0.52 0.54 0.54 0.52 0.54 0.54 324 936 1\t260 296 964 380 65 140 205 175 104 71 343 414 (48) $853 0.5 0.5 0.5 0.5 0.5 0.5 0.5 250 290 150 350 (65) 450 (165) 1\t260 0.5 0.5 117 290 407 $85 53 361 432 108 K1\t635 1\t635\tx\t0.5 $818 1\t635\tx\t0.54 $883 $(65) 32 Change\tin\tretained\tearnings = K705\t-\tK635 = K70 Change\tx\tending\texchange\trate = K70\tx\t0.5 = $35 Change\tas\ttranslated = $361\t-\t$343 = $18 Translation\tgain = $17 Balance\tof\tFCTR = $(65)\t+\t$17 = $(48) 1.\t(b)\tTranslation\tfrom\tlocal\tcurrency\t(K)\tto\tfunctional\tcurrency\t(A$A) K'000 K'000 $'000 Revenue 2\t585 0.52 1\t344 Cost\tof\tsales: Opening\tstock 600 0.54 324 Purchases 1\t800 0.52 936 2\t400 1\t260 Closing\tstock 580 0.51 296 Cost\tof\tsales 1\t820 964 Gross\tprofit 765 380 Depreciation 115 0.54 62 10 0.52 5 Other\texpenses 270 0.52 140 395 207 370 173 Foreign\tExchange\tGain 15 188 Income\ttax\texpense 200 0.52 104 Profit\tfor\tthe\tperiod 170 84 Retained\tearnings\tas\tat\t1/7/16 635 0.54 343 805 427 Dividend\tpaid 50 0.54 27 50 0.52 26 100 53 Retained\tearnings\tas\tat\t30/6/17 705 374 Share\tcapital 800 0.54 432 General\treserve 200 0.54 108 1\t705 914 Cash\t&\treceivables 500 0.50 250 Inventory 580 0.51 296 Land 300 0.54 162 Buildings 700 0.54 378 Accumulated\tdepreciation (130) 0.54 (70) Plant 800 0.54 432 100 0.52 52 Accumulated\tdepreciation (320) 0.54 (173) 33 Current\tliabilities Notes Net\tAssets (10) 2\t520 0.52 (5) 1\t322 235 580 815 0.5 0.5 118 290 408 $1\t705 2.\t(b)\tProof\tof\texchange\tgain K'000 Net\tMonetary\tAssets\tat\t1/7/16 *(430) Increases:\tSales 2\t585 2155 Decreases: Purchases 1\t800 Other\texpenses 270 Income\ttax\texpense 200 Dividends 50 50 Acquisition\tof\tplant 100 $2\t470 Net\tMonetary\tAssets\tat\t30/6/17 (315) Foreign\tExchange\tGain 15 (Any\tdifference\tis\tdue\tto\trounding) *Opening\tstatement\tof\tfinancial\tposition: Share\tCapital 800\t000 General\tReserve 200\t000 Retained\tEarnings 635\t000 1\t635\t000 Inventory 600\t000 Land 300\t000 Building\t(net) 600\t000 Plant\t(net) 565\t000 Net\tMonetary\tAssets *430\t000 1\t635\t000 $914 (0.54\t-\t0.5) (0.52\t-\t0.5) K'000 Gain/(loss) 17 (52) (35) (0.52\t-\t0.5) (0.52\t-\t0.5) (0.52\t-\t0.5) (0.54\t-\t0.5) (0.52\t-\t0.5) (0.52\t-\t0.5) 36 5 4 2 1 2 $50 34 Tut10 Question\t23.1 not statements Adjustments\twhere\tinvestor\tprepares\tand\tdoes prepare\tconsolidated\tfinancial Piano Ltd has a 30% interest in a joint venture, Mandolin Ltd, in which it invested $50 000 on 1 July 2014. The equity of Mandolin Ltd at the acquisition date was: Share\tcapital Retained\tearnings $ 30\t000 120\t000 All the identifiable assets and liabilities of Mandolin Ltd were recorded at amounts equal to their fair values. Profits and dividends for the years ended 30 June 2015 to 2017 were as follows: Profit before tax Income tax expense Dividends paid 2015 $80\t000 $30\t000 $80\t000 * 2016 70\t000 25\t000 15\t000 2017 60\t000 20\t000 10\t000 Required A. Prepare journal entries in the records of Piano Ltd for each of the years ended 30 June 2015 to 2017 in relation to its investment in the joint venture, Mandolin Ltd. (Assume Piano Ltd does not prepare consolidated financial statements.) B. Prepare the consolidation worksheet entries to account for Piano Ltd's interest in the joint venture, Mandolin Ltd. (Assume Piano Ltd does prepare consolidated financial statements.) 30% Piano\tLtd Mandolin\tLtd At\t1\tJuly\t2014: Net\tfair\tvalue\tof\tidentifiable\tassets and\tliabilities\tof\tMandolin\tLtd = $150\t000 Net\tfair\tvalue\tacquired = 30%\tx\t$150\t000 = $45\t000 Cost\tof\tinvestment = $50\t000 Goodwill = $5\t000 1. Journal\tentries\tin\tthe\taccounts\tof\tPiano\tLtd 1\tJuly\t2014 Investment\tin\tMandolin\tLtd Dr 50\t000 Cash/Payable Cr 50\t000 (Acquisition\tof\tshares\tin\tMandolin\tLtd) 2014\t-\t2015 Cash Dr 24\t000 Investment\tin\tMandolin\tLtd Cr 24\t000 (Dividend\treceived\tfrom\tMandolin\tLtd: 30%\tx\t$80\t000) 30\tJune\t2015 Investment\tin\tMandolin\tLtd Dr 15\t000 Share\tof\tprofit\tor\tloss\tof Cr 15\t000 associates\tand\tjoint\tventures 35 2015\t-\t2016 30\tJune\t2016 2016-\t2017 (Recognition\tof\tprofit\tin\tMandolin\tLtd: 30%\tx\t$50\t000) Cash Investment\tin\tMandolin\tLtd (Dividend\treceived:\t30%\tx\t$15\t000) Investment\tin\tMandolin\tLtd Share\tof\tprofit\tor\tloss\tof associates\tand\tjoint\tventures (Recognition\tof\tprofit\tin\tMandolin\tLtd: 30%\tx\t$45\t000) Cash Investment\tin\tMandolin\tLtd (Dividend\tfrom\tjoint\tventure: 30%\tx\t$10\t000) Investment\tin\tMandolin\tLtd\t* Share\tof\tprofit\tor\tloss\tof associates\tand\tjoint\tventures (Recognition\tof\tprofit\tin\tMandolin\tLtd: 30%\tx\t$40\t000) Dr Cr Dr Cr 4\t500 4\t500 13\t500 13\t500 Dr Cr Dr Cr 3\t000 3\t000 12\t000 12\t000 2. Consolidation\tWorksheet\tEntries 30\tJune\t2013: Investment\tin\tMandolin\tLtd Share\tof\tprofit\tor\tloss\tof\tassociates\tand joint\tventures (30%\tx\t$50\t000 Dividend\trevenue Investment\tin\tMandolin\tLtd (30%\tx\t$80\t000 30\tJune\t2014: Retained\tearnings\t(1/7/15) Investment\tin\tMandolin\tLtd (30%\tx\t$(30\t000)) Investment\tin\tMandolin\tLtd Share\tof\tprofits\tor\tlosses\tof\tassociates\tand joint\tventures (30%\tx\t$45\t000) Dividend\trevenue Investment\tin\tMandolin\tLtd (30%\tx\t$15\t000) Dr 15\t000 Cr 15\t000 Dr Cr 24\t000 24\t000 Dr Cr 9\t000 9\t000 Dr 13\t500 Cr 13\t500 Dr Cr 4\t500 4\t500 36 30\tJune\t2015: Investment\tin\tMandolin\tLtd Retained\tearnings\t(1/7/16) (30%\t[$30\t000\t+\t$(30\t000)]) Investment\tin\tMandolin\tLtd Share\tof\tprofit\tor\tloss\tof\tassociates\tand joint\tventures (30%\tx\t$40\t000) Dividend\trevenue Investment\tin\tMandolin\tLtd (30%\tx\t$10\t000) Dr Cr 0 Dr 12\t000 Cr 12\t000 Dr Cr 3\t000 3\t000 0 37 Tut11 Question\t24.4 Sharing\tof\toutput On 1 July 2016, Darwin Ltd entered into a joint agreement with Broome Ltd to form an unincorporated entity to produce a new type of widget. It was agreed that each party to the agreement would share the output equally. Darwin Ltd's initial contribution consisted of $2 000 000 cash and Broome Ltd contributed machinery that was recorded in the records of Broome Ltd at $1 900 000. During the first year of operation both parties contributed a further $3 000 000 each. On 30 June 2017, the venture manager provided the following statements: Costs Incurred For the year ended 30 June 2017 Wages Supplies Overheads Cost\tof\tinventory Work\tin\tprogress\tat\t30\tJune\t2017 $1 840 000 2 800 000 2 200 000 6 840 000 (4 840 000) $ 2 000 000 Receipts and Payments for year ended 30 June 2017 Receipts: Original contributions Additional\tcontributions Payments: Machinery (2/7/16) Wages Supplies Overheads Operating expenses Closing\tcash\tbalance $ $ 800 000 1 800 000 3 000 000 2 100 000 200 000 $ 2 000 000 6 000 000 8 000 000 7 900 000 100 000 Assets and Liabilities at 30 June 2017 Assets Cash Machinery Supplies Work in progress Total assets Liabilities Accrued wages Creditors Total liabilities Net assets $ 100 000 2 800 000 400 000 2 000 000 $ 5 300 000 40 000 300 000 $ 340 000 $ 4 960 000 Each joint operator depreciates machinery at 20% p.a. on cost in its own records. Required 38 A. Prepare the journal entries in the records of Darwin Ltd and Broome Ltd in relation to the joint operation. B. Prepare the journal entries in the records of Broome Ltd assuming that the joint operation, not the operators, had depreciated the machinery and included that expense in the cost of inventory transferred. PART\tA JOURNAL\tENTRIES\tIN\tRECORDS\tOF\tDARWIN\tLTD $'000 1\tJuly\t2016 Cash\tin\tJ0 Dr 1\t000 Machinery\tin\tJ0 Dr 1\t000 Cash Cr Cash\tin\tJ0 Dr 3\t000 Cash Cr 30\tJune\t2017 Machinery\tin\tJ0 Dr 400 Supplies\tin\tJ0 Dr 200 Work\tin\tprogress\tin\tJ0 Dr 1\t000 Inventory Dr 2\t420 Operating\texpenses Dr 100 Accrued\twages\tin\tJ0 Cr Creditors\tin\tJ0 Cr Cash\tin\tJ0 Cr Inventory\t-\tdepreciation\texpense Dr 280 Accum.\tdepreciation\tin\tJO Cr $'000 2\t000 (2\t000/2) (2\t000/2) 3\t000 20 150 3\t950 (2800/2\t-\t1\t000) (400/2) (2\t000/2) (4\t840/2) (200/2) (40/2) (300/2) (100/2\t-\t4\t000) 280 (20%\tx\t1\t400) JOURNAL\tENTRIES\tIN\tTHE\tRECORDS\tOF\tBROOME\tLTD $'000 1\tJuly\t2016 Cash\tin\tJO Dr 1\t000 Machinery\tin\tJO Dr 950 Gain\ton\tmachinery\tsold Cr Machinery Cr Cash\tin\tJO Dr 3\t000 Cash Cr $'000 50 1\t900 (2\t000/2) (1\t900/2) (100/2) 3\t000 30\tJune\t2017 Machinery\tin\tJO Supplies\tin\tJO Dr Dr 400 200 (2800/2\t-\t1\t000) (400/2) 39 Work\tin\tprogress\tin\tJO Dr 1\t000 Inventory Dr 2\t420 Operating\texpenses Dr 100 Accrued\twages\tin\tJO Cr Creditors\tin\tJO Cr Cash\tin\tJO Cr Inventory\t-\tdepreciation\texpense Dr 270 Accum.\tdepreciation\tin\tJO Cr PART\t2 JOURNAL\tENTRIES\tIN\tTHE\tRECORDS\tOF\tBROOME\tLTD $'000 1\tJuly\t2016 Cash\tin\tJO Dr 1\t000 Machinery\tin\tJO Dr 950 Gain\ton\tmachinery\tsold Cr Machinery Cr Cash\tin\tJV Dr 3\t000 Cash Cr 30\tJune\t2017 Machinery\tin\tJO Dr 400 Supplies\tin\tJO Dr 200 Work\tin\tprogress\tin\tJO Dr 1\t000 Inventory Dr 2\t700 Other\texpenses Dr 100 Accum\tdepreciation\tin\tJO Cr Accrued\twages\tin\tJO Cr Creditors\tin\tJO Cr Cash\tin\tJO Cr Accum\tdepreciation\tin\tJO Dr 10 Inventory Cr Work\tin\tprogress\tin\tJO Cr (Adjustment\tfor\tdepreciation\tbeing based\ton\tcarrying\tamount\trather\tthan\tfair\tvalue) Working Inventory 2\t700 73% Work\tin\tProgress\tin\tJO 1\t000 27% 3\t700 20 150 3\t950 (2\t000/2) (4\t840/2) (200/2) (40/2) (300/2) (100/2\t-\t4\t000) 270 (20%(400\t+\t950) $'000 50 1\t900 (2\t000/2) (1\t900/2) (100/2) 3\t000 280 20 150 3\t950 (2800/2\t-\t1\t000) (400/2) (2\t000/2) (4\t840/2)\t+ 280\tdepn) (200/2) (1/2\tx\t20%\tx\t2800) (40/2) (300/2) (100/2\t-\t4\t000) 7 3 7 3 10 40