Question
On 01 July 2020, Sunshine Manufacturing Ltd acquired all the issued shares of Gold coast Ltd for $227,000. The equity of gold coast at this
On 01 July 2020, Sunshine Manufacturing Ltd acquired all the issued shares of Gold coast Ltd for $227,000. The equity of gold coast at this date is as follows:
Share capital $65000
Retained earnings $36000
Al the identifiable assets and liabilities of Gold coast Ltd were recorded at amounts equal to their fair values at acquisition date except for.
Carrying amount Fair value
Inventory 82,000 88,000
Machine (the cost is:78,000) 54,000 57,000
The equipment was considered to have a further useful life: 5yrs
Of the inventory, 80% was sold by 30 June 2021.
The following information was provided by the two companies at 30 June 2021.
Sunshine Goldcoast
Profit before tax 112,000 12500
Income tax expense 48,000 4200
Profit for the year 64,000 8300
Retained earnings (01/07/2020) 80,000 36,000
Retained earnings (30/06/2021) 144,000 44,300
Share capital 360,000 65,000
Retained earings 144,000 44,300
General reserve 10,000 0
Asset revaluation surplus 18,500 0
Liabilities 128,500 22,000
661,000 131,300
Land 129,000 20,000
Plant and Equipment 360,000 125,600
Accumulated depreciation 110,000 33,000
Inventory 55,000 18,700
Investment in Goldcoast 227,000 0
661,000 131,300
In addition, there are some intra-group transactions between Sunshine and Goldcoast shown below:
a. During the year, Sunshine sold inventory costing 4,500 to Goldcoast for 6,000. At the end of the year, 30% of the inventory is still held on hand by Goldcoast.
b. on 1 Jannuary 2021, Goldcoast sold a plant to Sunshine. The plant has carrying amount of 115,000. Tomson sold it to Sunshine 130,000. The remaining useful life is estimated to be 5 years.
Required: Prepare the following on 30 June 2021.
1. Prepare the Acquisition analysis
2. Consolidation adjusting entries
3. Consolidation worksheet
4. Consolidated financial statements (including consolidated statement of profit or loss and other comprehensive income, consolidated statement of equity
and consolidated statement of financial position.)
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