P5.2 Consolidation adjustments and elimination entries The financial statements of Jewel Ltd and its subsidiary Opal Ltd are shown below: Income Statement and Partial Statement of Changes in Equity For the Year Ended 31 December 20x2 Jewel Ltd Opal Ltd Sales $10,000,000 $3.300.000 $ 160,000 Operating profit Dividend income from Opal Profit before tax Tax Profit after tax Retained earnings, 1 January 20x2. Dividends declared Retained earnings, 31 December 20x2 $ 1,000,000 23.400 $ 1,023,400 (220,000 $ 803,400 2.050,000 (100,000) $ 2.753.400 $ 160.000 (35.200) $ 124.800 210.000 (29.250) 305.550 Statement of Financial Position As at 31 December 20x2 Jewel Ltd $2.350.000 2.753.400 $5.103.400 Share capital Retained eaming Shareholders' equity Opal Ltd $300.000 305.550 $605,550 Investment in Opal, cost Other net assets Net assets $ 450,000 4.653,400 $5,103.400 $605,550 $605.550 Additional information: (a) Jewel Ltd acquired the interest in Opal Lid on January 200 when the shareholders' equity of Opal was as follows Share capital Retained earnings Shareholders' equity Purchase consideration paid by Jewel Ltd Percentage ownership by Jewel Ltd in Opal Ltd Fair value of identifiable net assets was close to the book value at acquisition date $300.000 120.000 420.000 450,000 80% (b) Goodwill and non-controlling interests Non-controlling interests are recognized at fair value on acquisition date, Fair value of non-controlling interests as at 1 January 2010 Goodwill impairment is as follows: $50,000 in previous years and $40.000 in the current year $112.500 (c) Intercompany sales $100.000 30 000 Intercompany sales made by Jewel to Opal during 2012 Profit on intercompany sales included in Opal's inventory as at 31 December 2012 Tax expense on profit on intercompany sales has been properly charged to the income statement of Jewel during 2012 (d) Taxation rate was 20%. Tax effects are to be considered wherever appropriate. Required: 1. Prepare consolidation adjustment and elimination entries for the year ended 31 December 20x2. Show all relevant workings. Worksheets are not required. 2. Perform an analytical check on non-controlling interests as at 31 December 20x2. 3. Perform an analytical check on consolidated retained earnings as at 31 December 20x2. P5.2 Consolidation adjustments and elimination entries The financial statements of Jewel Ltd and its subsidiary Opal Ltd are shown below: Income Statement and Partial Statement of Changes in Equity For the Year Ended 31 December 20x2 Jewel Ltd Opal Ltd Sales $10,000,000 $3.300.000 $ 160,000 Operating profit Dividend income from Opal Profit before tax Tax Profit after tax Retained earnings, 1 January 20x2. Dividends declared Retained earnings, 31 December 20x2 $ 1,000,000 23.400 $ 1,023,400 (220,000 $ 803,400 2.050,000 (100,000) $ 2.753.400 $ 160.000 (35.200) $ 124.800 210.000 (29.250) 305.550 Statement of Financial Position As at 31 December 20x2 Jewel Ltd $2.350.000 2.753.400 $5.103.400 Share capital Retained eaming Shareholders' equity Opal Ltd $300.000 305.550 $605,550 Investment in Opal, cost Other net assets Net assets $ 450,000 4.653,400 $5,103.400 $605,550 $605.550 Additional information: (a) Jewel Ltd acquired the interest in Opal Lid on January 200 when the shareholders' equity of Opal was as follows Share capital Retained earnings Shareholders' equity Purchase consideration paid by Jewel Ltd Percentage ownership by Jewel Ltd in Opal Ltd Fair value of identifiable net assets was close to the book value at acquisition date $300.000 120.000 420.000 450,000 80% (b) Goodwill and non-controlling interests Non-controlling interests are recognized at fair value on acquisition date, Fair value of non-controlling interests as at 1 January 2010 Goodwill impairment is as follows: $50,000 in previous years and $40.000 in the current year $112.500 (c) Intercompany sales $100.000 30 000 Intercompany sales made by Jewel to Opal during 2012 Profit on intercompany sales included in Opal's inventory as at 31 December 2012 Tax expense on profit on intercompany sales has been properly charged to the income statement of Jewel during 2012 (d) Taxation rate was 20%. Tax effects are to be considered wherever appropriate. Required: 1. Prepare consolidation adjustment and elimination entries for the year ended 31 December 20x2. Show all relevant workings. Worksheets are not required. 2. Perform an analytical check on non-controlling interests as at 31 December 20x2. 3. Perform an analytical check on consolidated retained earnings as at 31 December 20x2