Question
On 1st July 20X7 Parent Ltd acquired all of the share capital of Controlled Ltd for $487,500. As that date equity of Controlled Ltd was:
On 1st July 20X7 Parent Ltd acquired all of the share capital of Controlled Ltd for $487,500.
As that date equity of Controlled Ltd was:
Share Capital $300,000
General Reserve $60,000
Retained Earnings $70,000
Consolidation worksheet 30 June 20X2 | Dr./Cr | Parent Ltd | Controlled Ltd | Elimination | Consolidated Statement | |
|
|
|
| Dr | Cr |
|
Sales | Cr | 4,000,000 | 2,200,000 |
|
|
|
Cost of goods sold | Dr | 2,300,000 | 1,000,000 |
|
|
|
Gross profit | Cr | 1,700,000 | 1,200,000 |
|
|
|
Dividend from Controlled Ltd | Cr | 30,000 |
|
|
|
|
Profit from sale of plant | Cr |
| 6,000 |
|
|
|
Interest from Controlled Ltd | Cr | 11,000 |
|
|
|
|
|
| 1,741,000 | 1,206,000 |
|
|
|
Selling expenses | Dr | 121,500 | 86,000 |
|
|
|
Administrative expenses | Dr | 400,000 | 250,000 |
|
|
|
Financial expenses | Dr | 362,000 | 220,000 |
|
|
|
Profit before tax | Cr | 857,500 | 650,000 |
|
|
|
Less: Income tax | Dr | 340,000 | 260,000 |
|
|
|
Profit | Cr | 517,500 | 390,000 |
|
|
|
Retained earnings 1-07-20X8 | Cr | 400,000 | 250,000 |
|
|
|
Available |
| 917,500 | 640,000 |
|
|
|
Less Appropriation: |
|
|
|
|
|
|
Interim dividend paid | Dr | 60,000 | 30,000 |
|
|
|
Declared dividend | Dr | 90,000 | 45,000 |
|
|
|
To General reserve | Dr |
| 5,000 |
|
|
|
Total appropriation | Dr | 150,000 | 80,000 |
|
|
|
Retained earnings 30-06-20X9 | Cr | 767,500 | 560,000 |
|
|
|
Share capital | Cr | 600,000 | 300,000 |
|
|
|
General reserve | Cr | 240,000 | 100,000 |
|
|
|
Dividend payable | Cr | 90,000 | 45,000 |
|
|
|
Current tax payable | Cr | 340,000 | 260,000 |
|
|
|
Payable | Cr | 112,500 | 25,000 |
|
|
|
Non-current liabilities | Cr | 200,000 | 60,000 |
|
|
|
|
| 2,350,000 | 1,350,000 |
|
|
|
Land and building | Dr | 450,000 | 250,000 |
|
|
|
Motor vehicle (net) | Dr | 130,000 | 60,000 |
|
|
|
Plant and equipment (net) | Dr | 500,000 | 400,000 |
|
|
|
Investment in Controlled Ltd | Dr | 457,500 | - |
|
|
|
Receivable | Dr | 200,000 | 300,000 |
|
|
|
Inventory | Dr | 300,000 | 150,000 |
|
|
|
Bank | Dr | 312,500 | 190,000 |
|
|
|
Goodwill on consolidation | Dr | - | - |
|
|
|
Accumulated impairment-goodwill | Dr | - | - |
|
|
|
|
| 2,350,000 | 1,350,000 |
|
|
|
Additional Information:
- Sales by Controlled Ltd to Parent Ltd were $60,000
- Unrealized profit in the opening inventory of Controlled Ltd for goods sold by Parent Ltd was $2,000.
- Unrealized profit in the closing inventory of Parent Ltd for goods sold by Controlled Ltd was $4,000
- On 1st July, 20X8 Controlled Ltd sold plant to Parent Ltd for $60,000. At the date of sale the plant had a written-down value of $54,000. Parent Ltd depreciates plant at 10% per annum on cost using the straight-line method.
- Impairment of goodwill:
Year ended 30 June 20X8 $5,500
Year ended 30 June 20X9 $5,500
Required: For year ended 30 June, 20X9
a. Consolidation journal entries
b. The consolidation worksheet, and
c. Consolidated financial statement
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