Part A

You are working as an accountant for Bronson, Lazenby & Dalton and the senior partner has asked you to prepare a report answering the following questions about consolidation procedures for a client:

Follyfoot Ltd has a 33% interest in the share capital of Cue Ltd, which is a company involved in the same industry as Follyfoot Ltd. The remaining share capital is owned by Mr and Mrs Lewelyn who are the founders of Cue Ltd. Mr and Mrs Lewelyn have given Follyfoot Ltd three out of five seats available on the board of directors. Follyfoot Ltd takes the lead on all decisions but the business is closely monitored by Mr and Mrs Lewelyn who hold the other two board positions.

Advise the directors of Follyfoot Ltd of the requirements of AASB 10 in respect of the control criterion and how they would apply to this investment.

Why is it necessary to make adjustments for intra-group transactions?

As the majority of the directors do not have an accounting background, your report answering the questions must be written to convey a clear understanding of consolidation accounting concepts (control vs significant influence) and other relevant accounting issues.

Part B

You have been asked to prepare the consolidated accounts for a group of companies that contain an Australian company called Prym Ltd and their foreign subsidiary Lang Inc. Prym Ltd and Lang Inc both have functional currencies of the country they reside in, but for presentation purposes the group reports in Australian dollars. Prym Ltd bought all the shares of Lang Inc at the beginning of the current year. You may complete this assignment manually or using either word or excel.

In order to complete this task, you are required to:

• Translate Lang Incs data into Australian Dollars
• Consolidate the two sets of Accounting Records

and

• Prepare General Purpose Financial Reports for the consolidate group (Statement of Income and Statement of Financial Position only).
• Calculations should not be rounded until the General Purpose Financial Reports, but should be shown to the nearest dollar in your reports

You need to do the requested reports and showing your calculations.

Addition Information for Part B
Closing Inventory for Lang Inc was 895,000
Closing Inventory for Pym Ltd was A$2,350,000
Pym Ltd sold A$5,600,000 of stock to Lang Inc during the year
Lang Inc had sold all that stock by year end, but because of extended trading terms offered to Lang Inc, Pym Ltd still had A$700,000 of inter company sales in their debtors' balance.
Pym Ltd charges Lang Inc A$1,000 per month in technical advice and charged a total of A$241,500 in interest on the inter-company loan.
Lang Inc paid their 20,000 Interim Dividend on the 26th of January.
Lang Inc declared their Final Dividend on the 30th June and plan to pay the dividend on the 2nd of August
Summary of Exchange Rates
1st July	1.00 =	A$2.21
Average rate for the year	1.00 =	A$2.24
Ending Inventory (Pur'd before year end)	1.00 =	A$2.35
26th January	1.00 =	A$2.22
30th June	1.00 =	A$2.37
2nd August	1.00 =	A$2.33