Other information

Blade Ltd acquired its 100 per cent interest in Runner Ltd for $716000 (cum div) on 1 July 2014 four years earlier. Dividend declared and paid by Runner Ltd was $4 000 on 31 July 2014. On 1 July 2014, the capital and reserves of Runner Ltd were:

Share capital

$400000

Retained earnings

$250000

$650000

At the date of acquisition all assets were considered to be fairly valued.

The opening inventory in Blade Ltd as at 1 July 2017 included inventory acquired from Runner Ltd for $84000 that had cost Runner Ltd $70000 to produce.

During the year ended 30 June 2018, Blade Ltd made total sales to Runner Ltd of $130000, while Runner Ltd sold $104000 in inventory to BladeLtd.

The closing inventory in Blade Ltd includes inventory acquired from Runner Ltd at a cost of $67200. This cost Runner Ltd $52000 to produce.

The closing inventory of Runner Ltd includes inventory acquired from Blade Ltd at a cost of $24000. This cost Blade Ltd $19200 to produce.

The management of Blade Ltd believe that goodwill acquired was impaired by $5 000 in the current financial year. Previous impairments ofgoodwill amounted to $10000.

On 1 July 2017 Blade Ltd sold an item of plant to Runner Ltd for $100000 when its carrying value in Blade Ltd's accounts was $80000 (cost $120000, accumulated depreciation $40000). This plant is assessed as having a remaining useful life of six years from the date of sale.

Runner Ltd paid $20000 in management fees to Blade Ltd.

The tax rate is 30 per cent.

REQUIRED

a)Prepare the consolidation worksheet entries for Blade group at 30 June 2018.20 marks

b).Complete the attached consolidation worksheet.10 marks

Question 3 (30 marks) + The following financial records at 30 June 2018 are extracted from Blade Ltd and its subsidiary Runner Ltd. " Blade Ltd Runner Ltd ($000) ($000) Detailed reconciliation of opening and closing retained earnings." Sales revenue 1 380 1 160 Cost of goods sold - (928) (476)+ Gross profit - 452+ 684++ Dividends received from Runner Ltd - 186+ ES Management fee revenue - Gain on sale of plant - 70 + t Expenses Administrative expenses - (98.8)+ (77.4) Depreciation - (49)+ (113.6) Management fee expense - (53)+ Other expenses - (202.2)+ (154) Profit before tax - 411+ 286++ Tax expense - 123 84.4 + + Profit for the year - 288+ 201.6 Retained earnings-30 June 2017 - 638.8 478.4 926.8+ 680 Dividends paid - (274.8)+ (186) Retained earnings-30 June 2018 - 652 494Statement ofnanciaipositiond-'l Shareholders ' equity 1-" Retained earnings 4 Share capital 4 Current liabilities 4-" Accounts payable 4 Tax payable 4 Non-current liabilities 4-" Loans 4 Current assets 43 Accounts receivable 4 Inventory 4 Non-current assets 4-" Land and buildings 4 Other information J Blade Ltd acquired its 100 per cent interest in Runner Ltd for $116 000 (cum div) on 1 July 2014 four years earlier. Dividend declared and paid by Runner Ltd was $4 000 on 31 July 2014. On 1 July 2014, the capital and reserves of Runner Ltd were: 4J Share capital 0 $400 0001J 0200000 _ 0000000 At the date of acquisition all assets were considered to be fairly valued. J The opening inventory in Blade Ltd as at 1 July 201? included inventory acquired from Runner Ltd for $84 000 that had cost Runner Ltd $70 000 to produce. J During the year ended 30 June 2018, Blade Ltd made total sales to Runner Ltd of $130 000, while Runner Ltd sold $104 000 in inventory to Blade Ltd. J The closing inventory in Blade Ltd includes inventory acquired from Runner Ltd at a cost of $67 200. This cost Runner Ltd $52 000 to produce. J The closing inventory of Runner Ltd includes inventory acquired from Blade Ltd at a cost of $24 000. This cost Blade Ltd $19 200 to produce.