Part A $-$ Consolidation Question

On $01/07/2020,$ Breve Ltd acquired $100\%$ of the issued shares of Minim Ltd for:

At the date of acquisition, the Owners' Equity of Minim Ltd consisted of:

Share capital

General Reserve

Retained earnings

The accounts of the two companies appear as at $30/06/2024$ are as follows:

Sales

less Cost of Goods Sold

Depreciation expense

Interest expense

Other expenses

Other Income

plus Interest revenue

Dividend revenue

less Income tax expense

Net Profit after Tax

Retained earnings $(01/07/2023)$

Available for appropriation

Interim dividend paid

Final dividend declared

Retained earnings $(30/06/2024)$

Share Capital

General Reserve

Total Owner's Equity

Loan payable $($due $30/06/2026)$

Dividend payable

Deferred Tax Liability

Other liabilities

Total Liabilities

Total Liabilities & Owner's Equity

Breve Ltd

S

$7\mathrm{.}507\mathrm{.}500$

$4\mathrm{.}504500$

$375\mathrm{.}300$

$300\mathrm{.}300$

$682500$

$89\mathrm{.}600$

$410\mathrm{.}500$

$643\mathrm{.}500$

$1\mathrm{.}501\mathrm{.}500$

$2,252,100$

$3\mathrm{.}753\mathrm{.}600$

$351\mathrm{.}900$

$586500$

$2\mathrm{.}815\mathrm{.}200$

$6\mathrm{.}099\mathrm{.}600$

$469\mathrm{.}200$

$9\mathrm{.}384\mathrm{.}000$

$0$

$586\mathrm{.}500$

$703\mathrm{.}800$

$1\mathrm{.}055\mathrm{.}700$

$2\mathrm{.}346\mathrm{.}000$

$11\mathrm{.}730\mathrm{.}000$

Assets

Dividend receivable

Inventory

Property, Plant & Equipment

Accumulated depreciation

Land

Investment in Minim Ltd

Loan receivable

Other assets

Total Assets

$234,600$

$1\mathrm{.}642\mathrm{.}200$

$3,167,100$

$-1\mathrm{.}266\mathrm{.}900$

$1\mathrm{.}994\mathrm{.}100$

$4,692,000$

$703\mathrm{.}000$

$563900$

$11\mathrm{.}730\mathrm{.}000$

$$4,692,000$

$$2\mathrm{.}111\mathrm{.}400$

$$527,900$

$$395\mathrm{.}820$

$$3\mathrm{.}035\mathrm{.}120$

Minim Ltd

S

$3\mathrm{.}783\mathrm{.}000$

$2\mathrm{.}458900$

$189\mathrm{.}100$

$59\mathrm{.}755$

$174\mathrm{.}545$

$0$

$0$

$270\mathrm{.}200$

$630\mathrm{.}500$

$659\mathrm{.}700$

$1\mathrm{.}290\mathrm{.}200$

$175900$

$234\mathrm{.}600$

$879\mathrm{.}700$

$2,111,400$

$527900$

$3\mathrm{.}519\mathrm{.}000$

$703\mathrm{.}000$

$234\mathrm{.}600$

$58\mathrm{.}600$

$176\mathrm{.}800$

$1\mathrm{.}173\mathrm{.}000$

$4,692,000$

$0$

$281,500$

$1\mathrm{.}876\mathrm{.}800$

$-375\mathrm{.}400$

$1\mathrm{.}876\mathrm{.}800$

$0$

$0$

$1,032\mathrm{.}300$

$4,692,000$

Part A $-$ Consolidation Question

On $01/07/2020,$ Breve Ltd acquired $100\%$ of the issued shares of Minim Ltd for:

The accounts of the two companies appear as at $30/06/2024$ are as follows:Additional information:

$($a$)$ At date of acquisition, all identifiable net assets of Minim Ltd were recorded at fair value, with the exception of a item of Plant in the books of Minim Ltd$.$

The item of Plant had cost of $$1,219,920,$ and an accumulated depreciation of $$244,010.$ The management of Breve Ltd believed the item of Plant had a

fair value of $$1,366,274$ and a remaining useful life of $5$ years.

$($b$)$ The directors apply the impairment test for goodwill annually. As at $30/06/2024,$ the cumulative goodwill impairment write$-$downs for prior years totalled

$$1,243,000.$ During the current year, the goodwill has further been impaired by another $$18,645.$

$($c$)$ An item of Equipment owned by Minim Ltd was sold to Breve Ltd on $01/01/2021$ for $$429,400.$ The cost of the Equipment was $$375,360$ and its

accumulated depreciation was $$75,080$ at the time of trasnfer. Breve Ltd estimated this item had an annual depreciation rate of $10\%$ with no residual

value.

$($d$)$ The opening inventory of Breve Ltd includes unrealised profit of $$492,000$ on inventory transferred from Minim Ltd during the prior financial year. All of

this inventory was sold by Breve Ltd to parties external to the Group by $30/06/2024.$

$($e$)$ During the financial year ending on $30/06/2024,$ Breve Ltd purchased inventory from Minim Ltd for $$2,134,000.$ This inventory had previously cost

Minim Ltd $$853,000.$ By $30/06/2024,55\%$ of this inventory was sold to outsiders by Breve Ltd$.$

$($f$)$ Minim Ltd borrowed a loan from Breve Ltd amounting to $$703,000$ at the start of the current period. On $30/06/2024,$ Minim Ltd paid the annual interest

for the intra group loan at a rate of $8\mathrm{.}50\%$

$($e$)$ During the current year, Breve Ltd paid Arina Ltd$,$ an external party for management fees expense amouning to $$2,000$

$($i$)$ The tax rate is:

$30\%$

Requirements:

Prepare the acquisition analysis at the date of acquisition.

$()$ Record the consolidated journal entries necessary to prepare consolidated accounts for the year ending $30/06/2024$ for the group comprising Breve Ltd

and Minim Ltd$.$

$-$ Entering the consolidated journal entries in Part $($i$)$ above to the appropriate debit and credit columns in the Consolidated Worksheet; and

$-$ Clearly labelling the references for each of the adjustments in the Consolidated Worksheet.

Part B $-$ Discussion Question on Control

Pasta Ltd holds $40$ per cent of the voting rights of Spaghetti Ltd$.$ Two other shareholdes, Burger King and Big Buns, each hold $25$ per cent of the voting

rights of Spaghetti. The remaining voting rights are held by numerous other shareholders, none individually holding more than $1$ per cent of the voting

rights. Typically, $65$ per cent of eligible votes are cast at the annual general meetings of Spaghetti Ltd$.$ A shareholder agreement grants Pasta Ltd the right

to appoint, remove, and set the remuneration of non$-$executive directors of the board of Spaghetti Ltd$.$ There are no other arrangements that affect

Spaghetti's decision making.