please help me to solve this question, especially intragroup, NCI, worksheet, Group SPLOCI SOFP and SOCIE...thank u

SECTION A (178 marks) Part 1: Case Study - Acquisition of a subsidiary Mildred Ltd is a public listed company based in Borneo that are involved in software development technologies and also the provision of consultancy services related to information technology, software engineering and offshore software development. The Company is doing well but in need to improve on certain areas such as development of cybersecurity technologies. Hence, Mildred Ltd decided to acquire 75% of the share capital (cum div) and voting rights in Dawson Ltd (formerly known as Indigo Moon Ltd), a company which Mildred Ltd believes that it would assist in its plans to achieve further competitive advantage. The business combination occurred on 1 December 2013. Legal and accounting costs incurred by Mildred Ltd in undertaking this business combination amounted to $1,500. Costs to issue the shares to the A ordinary shareholders of Dawson Ltd were $900. On 1 June 2020, Indigo Moon Ltd changed its name to Dawson Ltd. Mildred Ltd obtained the following information extracts about Dawson Ltd as at the acquisition date: Non-current assets Goodwill $39 000 Current liabilities Dividend payable $60 505.59 Equity Share capital - Ordinary (549 999 fully paid shares) $1 099 998 - Preference (120 000 fully paid shares) $216 000 Retained earnings $360 000 General reserve $100 000 Software development reserve $50 000 In acquiring Dawson Ltd, Mildred Ltd agreed with the following terms of acquisition: Cash of $500,000, 75% of the amount to be paid on the acquisition date, with the balance due on 30 November 2015. The incremental borrowing rate for Mildred Ltd is 12%. Two shares in Mildred Ltd for every three shares held in Dawson Ltd. All shares issued by Mildred Ltd have a fair value of $5.00 per share. Preference shareholders in Dawson Ltd are to receive two fully paid shares in Mildred Ltd for every three shares held, or alternatively. $0.80 per share in cash payable at the acquisition date. Holders of 60,000 preference shares elected to receive cash. . Due to doubts as to whether the share price would remain at or above the $5.00 level, Mildred Ltd agreed to supply cash to the value of any decrease in the share price below $5.00. This guarantee was valid for a period of 6 months (to 31 May 2014). Mildred Ltd believed that there was a 80% chance that the share price would remain at or above $5.00 until 31 May 2014 (and a 20% chance that it would fall to $4.70). 3 You are the Group Financial Controller for Mildred Ltd and your accounting team is currently compiling financial information for the consolidated financial statements relating to the financial year ended 31 May 2021 for your auditors. 1 2 4 6 Eair Value Information of Dawson Ltd (subsidiary Mildred Ltd analysed the assets and liabilities of Dawson Ltd at the acquisition date and determined that the only assets and liabilities for which the fair value was different from the current recorded amount were: Note Carrying Fair value amount Trade receivables $ 200 000 $ 180 000 Freehold land 150 000 180 000 Software equipment (Cost = $229 977) 3 178 871 200 021 Inventories 100 000 190 000 Brands 5 60 000 Contingent liability NOTES: 1. Approximately 80% of the trade receivables at 1 December 2013 were fully collected by 31 May 2014 and the remaining 20% was fully recovered by 31 May 2020. 2. The land was sold during the financial year ended 31 May 2020 for $190,000. 3. The software equipment was considered to have a further useful life of 9 years and is depreciated on a straight-line basis. 4. In relation to the inventories held on the acquisition date, 25% were sold by 31 May 2014, 60% were sold by 31 May 2019 and the remaining 15% were written off for the financial year ended 31 May 2020. 5. Mildred Ltd also determined that the subsidiary had some internally generated brands with a fair value of $60,000 that were not recorded by Dawson Ltd because it did not meet the recognition criteria under AASB 138 Intangible Assets. These assets were estimated to have definite useful life of 20 years. 6. Dawson Ltd is currently being sued by a previous customer. The expected damages are $65,000. At the acquisition date, the lawyers had estimated that there was a 30% chance of losing the case. The liability for the litigation results in a payment of $15,000 in April 2021, with no further liability existing at 31 May 2021. The Group assumes that the fair value of the non-controlling interest (NCI) in the subsidiary at acquisition date to be $0.5 million. 7. Information on related party transactions (RPT): Previous Years' intragroup sales and purchases of inventories: 8. On 1 March 2019, Dawson Ltd sold inventories to Mildred Ltd for $200,000 at cost plus 20%. of these inventories, 28% remained on hand at 31 May 2020 and 8% remained on hand at 31 May 2021. 9. Mildred Ltd sold inventories with a sales margin of 35% to Dawson Ltd for $150,000 in May 2019. A quarter of these inventories was still held by Dawson Ltd at 31 May 2020. 10. On 11 February 2020, Mildred Ltd has on hand inventories worth $100,000 transferred from Dawson Ltd. The inventories had previously cost Dawson Ltd $50,000. By 31 May 2020, Mildred Ltd had sold $45,000 of the inventories to Maud Ltd, an external party. On 31 May 2021, Mildred Ltd had sold $20,000 of the same batch of inventories to Ross Ltd. Current Year's intragroup sales and purchases of inventories: 11. The inventories of Mildred Ltd included inventories purchased from Dawson Ltd for $300,000 on 16 June 2020. Dawson Ltd transferred these inventories to Mildred Ltd at cost plus 25% Other downstream transactions: 12. On 1 January 2018, Mildred Ltd sold a software equipment to Dawson Ltd for $250,000. The software equipment had originally cost Mildred Ltd $350,000 and the accumulated depreciation at the date of the disposal was $30,000. The asset was assessed as having a remaining useful life of seven years. 13. During the financial year ended 31 May 2020, Mildred Ltd charged its subsidiary management fee of $60,000. Dawson Ltd still owed its holding company 25% of the outstanding amount at 31 May 2020. In the financial year ended 31 May 2021, Mildred Ltd charged its subsidiary management fee of $10 000 per month and Dawson Ltd still owed its holding company $30,000 of unpaid management fees at 31 May 2021. Other upstream transactions: 14. On 1 June 2016, Mildred Ltd purchased loan stock issued by its subsidiary for $800,000. These loan stocks were payable over 6 years with an interest rate of 5.0% per annum Interest on the loan stock is paid yearly on the 31 March. Both companies accrue interest amounts every month. Interest income account was classified as other income' in Mildred Ltd.'s books and interest expense account were classified as "finance costs' in Dawson Ltd.'s books, Dawson Ltd has made payment of $200,000 on the principal loan on 1 January 2021. 15. On 1 May 2017, Dawson Ltd sold its internally generated cybersecurity software to Mildred Ltd for $130,000. At the time of its disposal it was estimated to have a definite useful life of 10 years using straight-line amortisation basis. 16. An interim dividend of $0.33 per share of 626,499 ordinary shares was paid by Dawson Ltd during the current financial year. 17. The final dividend of $0.25 each share for the 626,499 shares was declared by Dawson Ltd on 26 May 2021 from retained earnings and was paid subsequently on 16 June 2021. The constitution of the subsidiary allows directors to declare final dividend at any time and this is not subject to any further approval, authorisation or discretion. 18. Historically, the subsidiary raised further financing from external parties through the issuance of preference shares. Preference share dividends of $18,000 (2020: $12,000) was paid by the subsidiary during the financial year ended 31 May 2021. Other events: 19. Dawson Ltd is a separate cash-generating unit (CGU) for the group. As such, the management conducted an impairment test for purchased goodwill for indication of impairment on an annual basis. Mildred Ltd assessed that 15% of the total goodwill acquired by the Group was impaired at group level for the financial year ended 31 May 2019 in its investment in the subsidiary. It was further assessed that the goodwill above was impaired by additional 10% for each financial year ended 31 May 2020 and 31 May 2021. Impairment losses were classified as "Other expenses' accounts at group level. 20. The brands were assessed to be impaired by 10% per year, at Group level, as at 31 May 2020 and 31 May 2021, respectively. 21. On 3 March 2021, a vendor for the cybersecurity company billed Mildred Ltd $500,000 for some cybersecurity development work rendered for Mildred Ltd. However, Mildred Ltd disputed this invoice claiming that the vendor had breached some of the terms of the contract signed between them. The vendor then sued Mildred Ltd for non-payment of their bill issued to Mildred Mildred Ltd counter-sued the vendor for breaching the terms of the contract. The directors of Mildred Ltd estimated that the value of work done by this vendor as at 31 May 2021 was only $100,000. This case is still pending hearing by the Court which is scheduled to be held in September 2021. 22. The Group has legally enforceable rights to offset its tax liabilities with its tax assets. Accounting policies of the Group (extracts) The tax rate is 30%. Mildred Group Ltd uses the full goodwill method to prepare its consolidated financial statements in compliance with AASB 3/IFRS 3 Business Combinations and AASB 10/IFRS 10 Consolidated Financial Statements. Any adjustments for differences between carrying amounts at the acquisition date and fair values are made on consolidation. Business combination valuation reserve (BCVR) created are transferred on consolidation to retained earnings when assets are sold or fully consumed. The full effects of intragroup transactions are eliminated upon consolidation. When revalued assets are sold or fully consumed, any related revaluation surpluses are transferred to retained earnings 6 Part 2: Case Study - Acquisition of associates On 1 January 2017 Mildred Ltd acquired 32% of the shares (ex-div) of Robinson Ltd (formerly known as Timothy Ltd) for $190,000. On 1 June 2020, Timothy Ltd changed its name to Robinson Ltd. At this date, the equity of Robinson Ltd consisted of: Share capital (Ordinary shares of $1.30 each) $ 250 900 FOREX reserve 1 000 Retained earnings 138 000 389 900 At this date, all the identifiable assets and liabilities of Robinson Ltd were recorded at fair value except for a machinery which had a fair value of $120,000 greater than the carrying amount and inventories which had a fair value of $50,000 greater than its carrying amount. The machinery had a further expected useful life of 8 years. Approximately 60% of the inventories at the acquisition date had been sold to Lyndall Ltd in the year ended 31 May 2018, and the remaining 40% were sold in the year ended 31 May 2020. Robinson Ltd is regarded as an associate of Mildred Ltd, and accordingly, Mildred Ltd applies the equity method of accounting for its investment in the associate. Time apportionment applies whenever necessary. The tax rate is 30%. The financial statements of Robinson Ltd over the years contained the following information: Financial 5 months to 1 June 1 June 1 June 2019 1 June 2020 period/year ended 31 May 2017 2017 to 31 2018 to 31 to 31 May to 31 May May 2018 May 2019 2020 Profit(loss) for the $30,000 ($300,000) 60.000 $130,000 ($550,000) period/year Dividends paid $10,000 $25,000 $10,000 $20.000 $10,000 $10,000 paid on declared 19 June 2021 (AGM date = 19 June 2021) FOREX reserve balance $3,000 $30,000 $40,000 $80,000 $60,000 at year end 2021 Final dividends Additional financial information: C1. The opening inventories of Robinson Ltd at 1 June 2019 included goods of $38,000 purchased from Mildred Ltd at cost plus 25%. These inventories were all sold by 31 May 2020. C2. In May 2020, Robinson Ltd sold inventories to Mildred Ltd for $90,000 at a margin of 35%. All of these inventories were still held by Mildred Ltd at 31 May 2020. 60% of these inventories were sold to third parties on April 2021. ACC20013 Company Accounting Assignment: Mildred Ltd Case Study (2nd season) Semester 2, 2020 The separate financial statements for Mildred Ltd and Dawson Ltd were presented as follows: Mildred Ltd (Group of Companies) Statements of Profit or Loss and Other Comprehensive Income for the year ended 31 May 2021 Mildred Ltd Dawson Ltd Income Sales Less) Sales returns and allowances Less) Discounts given 2,596,560.00 (2.596.56) (5.193.12) 1,779,300.00 (1,779.30) (3,558.60) Net Sales 2,588,770.32 1,773,962. 10 Less) Cost of sales Less) Discounts received (1.220.383.20) 6,101.92 (533.790.00) 2.668.95 GROSS PROFIT 1,374,489.04 1,242,841.05 290,000.00 35,000.00 120,000.00 71,000.00 280,000.00 796 000.00 10,100.00 100,000.00 30,000.00 189.000,00 329,100.00 (441,415.20) Add) Other income Dividend income Other income Management fee income Interest income Gain on sale of property, plant and equipment Less) Administrative and other expenses Salaries, wages and allowances Management fee expense Legal and professional fee Rental expense Depreciation expense - PPE Amortisation expense - leasehold land Amortisation expense - intangible assets Loss on disposal of property, plant and equipment Other expenses Less) Finance costs Interest expense PROFIT BEFORE TAX Less) Income tax expense PROFIT FOR THE YEAR Other comprehensive income for the year, after tax: Gains on revaluations of PPE Exchange differences on translating foreign operation Total Comprehensive income for the year 10 (80,000.00) (372.900.00) (3.889.00) (13,000.00) (200,000.00) (563.000.00) (266,895.00) (120,000.00) (23,000.00) (20,000.00) (227,026.26) (2,336.00) (120,000.00) (308,500.00) (130,000.00) 366,284.84 (139,885.45) 226,399.39 (62,000.00) 422,183.79 (176,655.14) 245,528.65 100,000.00 10,000.00 355,528.65 226,399.39 ACC20013 Company Accounting Assignment Mildred Ltd Case Study (2 season) Semester 2.2020 Mildred Lad (Group of Companies) Statements of Financial Position as at 31 May 2021 Mildred Lid $ Dawson Ltd $ ASSETS Non-current assets Property, plant and equipment: Freehold land Leasehold land Accumulated amortisation - Leasehold land Tech & macery Accumulated depreciation - Tech & machinery Motor vehicles Accumulated depreciation - Motor vehicles Software equipment Rocumulated depreciation - Software equipment Fumiture & frings Accumulated depreciation - Future & fitings Other non-current assets: Intangible assets Acumulated impairment losses tangible assets Goodwill Accumulated impairmert losses - goodwill Investment in Dawson Lid Investment in Associates Accumulated parmente associate Loan stock receivables Investment in De Luna Korea Lid Deferred tax assets Total non-current assets 100 000.00 385.000.00 (26.889.00) 1285.000.00 (735.020.00) 400 000 00 240.000,00) 850,000.00 (478 12500) 453.000.00 226.500.00) 231,165.00 (17338.00 $26.54780 61125755) 200.000,00 (150.000.00 450.000.00 253 125.00 289.000.00 (144.500.00) 100,000.00 130 000 00 (2100000 39.000.00 2.535.000.00 190,000.00 600,000.00 180.000.00 5.380,466.00 7428571 150.000,00 1,272,379.97 Current assets Investments inunt trusts Invertones Trade receivables Other receives Interest receivable Dividend receive Amount Oue from associate Amout due from subsidiary Cash and cash equivalents Total current assets TOTAL ASSETS 190.000.00 612 000.00 1.700.000.00 600.00000 65.000.00 118.500.00 260.000.00 250,000.00 81343339 4,608.333.33 9.909, 399 39 266 283.58 678.000.00 1.525.000.00 787 267 15 20.000.00 30.000.00 509 542.43 3.814, 10321 5.087.483.18 11 ACC20013 Company Accounting Assignment Mildred Ltd Case Study (2 season) Semester 2, 2020 Midred Ltd Groun of Camoaniel Dashboard Calendar To-do Notifications Inbox ACC20013 Company Accounting Assignment: Mildred Ltd Case Study (2nd season) Semester 2, 2020 Mildred Ltd (Group of Companies) Statements of Financial Position as at 31 May 2021 Mildred Ltd $ Dawson Ltd $ 100,000.00 385,000.00 (26,889.00) 1,285,000.00 (735,020.00) 400,000.00 (240,000.00) 850,000.00 (478,125.00) 453,000.00 (226,500.00) 231,165.00 (17,336.00) 926,147.80 (611,257.55) 200,000.00 (160.000.00) 450,000.00 (253,125.00) 289,000.00 (144,500.00) 130,000.00 (21,000.00) 100,000.00 39,000.00 ASSETS Non-current assets Property, plant and equipment: Freehold land Leasehold land Accumulated amortisation - Leasehold land Tech & machinery Accumulated depreciation - Tech & machinery Motor vehicles Accumulated depreciation - Motor vehicles Software equipment Accumulated depreciation - Software equipment Furniture & fittings Accumulated depreciation - Furniture & fittings Other non-current assets: Intangible assets Accumulated impairment losses - intangble assets Goodwill Accumulated impairment losses - goodwill Investment in Dawson Lid Investment in Associates Accumulated impairment losses - associate Loan stock receivables Investment in Del Luna Korea Lid Deferred tax assets Total non-current assets Current assets Investments in unit trusts Inventories Trade receivables Other receivables Interest receivable Dividend receivable Amount due from associate Amount due from subsidiary Cash and cash equivalents Total current assets TOTAL ASSETS 2,535,000.00 190,000.00 600,000.00 180.000.00 5,380,466.00 74.285.71 150,000.00 1,273,379.97 190,000.00 612,000.00 1,700,000.00 600,000.00 65,000.00 118,500.00 260,000.00 250,000.00 813,433.39 4,608,933.39 9.989,399.39 266,293.58 676,000.00 1,525,000.00 787 267.15 20,000.00 30,000.00 509,542.48 3,814,103.21 5,087,483.18 11 Required for Section A (178 marks): 1) Prepare the Acquisition Analysis for the acquisitions of (0) Investment in subsidiary, and (ii) Investment in associates, showing all relevant workings. (26 marks) 2) Prepare the Consolidation Worksheet Journal Entries for Mildred Ltd Group for the financial year ended 31 May 2021, showing all relevant workings and applications of AASBS/IFRSs. List any assumptions that you may have. The Journal Entries must include narration(s) and supporting computation(s) (wherever relevant). Explanations are needed whenever necessary. (85 marks) 3) Prepare the Equity Accounting Journal Entries for inclusion in the consolidation worksheet of Mildred Ltd at 31 May 2021 for the Investment in associates, showing all relevant workings and applications of AASBs/IFRSs. List any assumptions that you may have. (35 marks) 4) Prepare the Consolidation Worksheets using Microsoft Excel for the financial year ended 31 May 2021 showing the consolidation journal entries, equity accounting applications and consolidated financial statements of Mildred Ltd group of companies. (Hint: See 19th edition textbook pages 621-633 and 760-768 for guidance) (10 marks) 5) Prepare and present the Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 May 2021 and Consolidated Statement of Financial Position as at 31 May 2021 for Mildred Ltd and its group of companies in accordance with relevant AASBS/IFRSs. Show all relevant computations and applications. (Hint: Refer to Chapter 5, 11th edition of the textbook for presentation) (12 marks) SECTION A (178 marks) Part 1: Case Study - Acquisition of a subsidiary Mildred Ltd is a public listed company based in Bomeo that are involved in software development technologies and also the provision of consultancy services related to information technology, software engineering and offshore software development. The Company is doing well but in need to improve on certain areas such as development of cybersecurity technologies. Hence, Mildred Ltd decided to acquire 75% of the share capital (cum div) and voting rights in Dawson Ltd (formerly known as Indigo Moon Ltd), a company which Mildred Ltd believes that it would assist in its plans to achieve further competitive advantage. The business combination occurred on 1 December 2013. Legal and accounting costs incurred by Mildred Ltd in undertaking this business combination amounted to $1,500. Costs to issue the shares to the A ordinary shareholders of Dawson Ltd were $900, On 1 June 2020. Indigo Moon Ltd changed its name to Dawson Ltd. Mildred Ltd obtained the following information extracts about Dawson Ltd as at the acquisition date: Non-current assets Goodwill $39 000 Current liabilities Dividend payable $60 505.59 Equity Share capital - Ordinary (549 999 fully paid shares) $1099 998 - Preference (120 000 fully paid shares) $216 000 Retained earnings $360 000 General reserve $100 000 Software development reserve S50 000 In acquiring Dawson Ltd, Mildred Ltd agreed with the following terms of acquisition: Cash of $500,000. 75% of the amount to be paid on the acquisition date, with the balance due on 30 November 2015. The incremental borrowing rate for Mildred Ltd is 12%. . Two shares in Mildred Ltd for every three shares held in Dawson Ltd. All shares issued by Mildred Ltd have a fair value of $5.00 per share. Preference shareholders in Dawson Ltd are to receive two fully paid shares in Mildred Ltd for every three shares held, or alternatively, 50.80 per share in cash payable at the acquisition date. Holders of 60,000 preference shares elected to receive cash. Due to doubts as to whether the share price would remain at or above the $5.00 level, Mildred Ltd agreed to supply cash to the value of any decrease in the share price below $5.00 This guarantee was valid for a period of 6 months (to 31 May 2014). Mildred Ltd believed that there was a 80% chance that the share price would remain at or above $5.00 until 31 May 2014 (and a 20% chance that it would fall to $4.70) You are the Group Financial Controller for Mildred Ltd and your accounting team is currently compiling financial information for the consolidated financial statements relating to the financial year ended 31 May 2021 for your auditors, Fair Value Information of Dawson Ltd (subsidiary) Mildred Ltd analysed the assets and liabilities of Dawson Ltd at the acquisition date and determined that the only assets and liabilities for which the fair value was different from the current recorded amount were: Note Carrying Fair value amount Trade receivables 1 $ 200 000 $ 180 000 Freehold land 2 150 000 180 000 Software equipment Cost = $229 977) 3 178 871 200 021 Inventories 4 100 000 190 000 Brands 15 60 000 Contingent liability 6 ? NOTES: 1. Approximately 80% of the trade receivables at 1 December 2013 were fully collected by 31st May 2014 and the remaining 20% was fully recovered by 31 May 2020 2. The land was sold during the financial year ended 31 May 2020 for $190,000 3 The software equipment was considered to have a further useful life of 9 years and is depreciated on a straight-line basis. 4. In relation to the inventories held on the acquisition date, 25% were sold by 31 May 2014 60% were sold by 31 May 2019 and the remaining 15% were written off for the financial year ended 31 May 2020. Mildred Ltd also determined that the subsidiary had some internally generated brands with a fair value of $60,000 that were not recorded by Dawson Ltd because it did not meet the recognition criteria under AASB 138 Intangible Assets. These assets were estimated to have definite useful life of 20 years 6. Dawson Ltd is currently being sued by a previous customer. The expected damages are $65,000 At the acquisition date, the lawyers had estimated that there was a 30% chance of losing the case. The liability for the litigation results in a payment of $15,000 in April 2021, with no further liability existing at 31 May 2021. 5. 7. The Group assumes that the fair value of the non-controlling interest (NCI) in the subsidiary at acquisition date to be $0.5 million Information on related party transactions (RPTI: Previous Years intragroup sales and purchases of inventories: 8 On 1 March 2019, Dawson Lid sold inventories to Mildred Ltd for $200,000 at cost plus 20%. of these inventories, 28% remained on hand at 31 May 2020 and 8% remained on hand at 31 May 2021 9. Mildred Ltd sold inventories with a sales margin of 35% to Dawson Lid for S150,000 in May 2019. A quarter of these inventories was still held by Dawson Lid at 31 May 2020 10. On 11 February 2020. Mildred Ltd has on hand inventories worth $100,000 transferred from Dawson Ltd. The inventories had previously cost Dawson Ltd $50,000. By 31 May 2020, Mildred Ltd had sold $45,000 of the inventories to Maud Ltd, an external party. On 31 May 2021, Mildred Ltd had sold $20,000 of the same batch of inventories to Ross Ltd Current Year's intragroup sales and purchases of inventories: The inventories of Mildred Ltd included inventories purchased from Dawson Ltd for $300,000 on 16 June 2020. Dawson Ltd transferred these inventories to Mildred Ltd at cost plus 25% Other downstream transactions: 12. On 1 January 2018, Mildred Ltd sold a software equipment to Dawson Ltd for $250,000 The software equipment had originally cost Mildred Ltd $350,000 and the accumulated depreciation at the date of the disposal was $30,000. The asset was assessed as having a remaining useful life of seven years. 13. During the financial year ended 31 May 2020, Mildred Ltd charged its subsidiary management fee of $60,000. Dawson Ltd still owed its holding company 25% of the outstanding amount at 31 May 2020. In the financial year ended 31 May 2021, Mildred Ltd charged its subsidiary management fee of $10 000 per month and Dawson Ltd still owed its holding company $30,000 of unpaid management fees at 31 May 2021 Other upstream transactions: 14 On 1 June 2016, Mildred Ltd purchased loan stock issued by its subsidiary for $800,000 These loan stocks were payable over 6 years with an interest rate of 5.0% per annum Interest on the loan stock is paid yearly on the 31 March. Both companies accrue interest amounts every month. Interest income account was classified as other income' in Mildred Lid's books and interest expense account were classified as finance costs' in Dawson Ltd's books. Dawson Ltd has made payment of $200,000 on the principal loan on 1 January 2021 s ACC20013 Company Accounting Assignment: Mildred Ltd Case Study (2nd season) Semester 2, 2020 15 On 1 May 2017 Dawson Ltd sold its internally generated cybersecurity software to Mildred Lid for $130,000 At the time of its disposal it was estimated to have a definite useful life of 10 years using straight-line amortisation basis, 16 An interim dividend of 50.33 per share of 626,499 ordinary shares was paid by Dawson Ltd during the current financial year, 17. The final dividend of $0,25 each share for the 626,499 shares was declared by Dawson Ltd on 26 May 2021 from retained earnings and was paid subsequently on 16 June 2021. The constitution of the subsidiary allows directors to declare final dividend at any time and this is not subject to any further approval, authorisation or discretion 18. Historically, the subsidiary raised further financing from external parties through the issuance of preference shares. Preference share dividends of $18,000 (2020: $12,000) was paid by the subsidiary during the financial year ended 31 May 2021 Other events: 19. Dawson Ltd is a separate cash-generating unit (CGU) for the group. As such, the management conducted an impairment test for purchased goodwill for indication of impairment on an annual basis. Mildred Ltd assessed that 15% of the total goodwill acquired by the Group was impaired at group level for the financial year ended 31 May 2019 in its investment in the subsidiary. It was further assessed that the goodwill above was impaired by additional 10% for each financial year ended 31 May 2020 and 31 May 2021. Impairment losses were classified as 'Other expenses' accounts at group level. 20 The brands were assessed to be impaired by 10% per year, at Group level, as at 31 May 2020 and 31 May 2021, respectively. 21. On 3 March 2021, a vendor for the cybersecurity company billed Mildred Ltd $500,000 for some cybersecurity development work rendered for Mildred Ltd. However, Mildred Ltd disputed this invoice claiming that the vendor had breached some of the terms of the contract signed between them. The vendor then sued Mildred Ltd for non-payment of their bill issued to Mildred. Mildred Ltd counter-sued the vendor for breaching the terms of the contract. The directors of Mildred Ltd estimated that the value of work done by this vendor as at 31 May 2021 was only $100,000. This case is still pending hearing by the Court which is scheduled to be held in September 2021. 22 The Group has legally enforceable rights to offset its tax liabilities with its tax assets. Accounting policies of the Group (extracts) The tax rate is 30% Mildred Group Ltd uses the full goodwill method to prepare its consolidated financial statements in compliance with AASB 3/IFRS 3 Business Combinations and AASB 10/1FRS 10 Consolidated Financial Statements. Any adjustments for differences between carrying amounts at the acquisition date and fair values are made on consolidation Business combination valuation reserve (BCVR) created are transferred on consolidation to retained eamings when assets are sold or fully consumed. The full effects of intragroup transactions are eliminated upon consolidation. When revalued assets are sold or fully consumed, any related revaluation surpluses are transferred to retained earnings 6 ACC20013 Company Accounting Assignment: Mildred Lid Case Study (2nd season) Semester 2, 2020 Part 2: Case Study - Acquisition of associates On 1 January 2017, Mildred Ltd acquired 32% of the shares (ex-div) of Robinson Ltd (formerly known as Timothy Ltd) for $190,000 On 1 June 2020. Timothy Ltd changed its name to Robinson Ltd At this date, the equity of Robinson Ltd consisted of Share capital (Ordinary shares of $1,30 each) $ 250 900 FOREX reserve 1 000 Retained earnings 138 000 389.900 At this date, all the identifiable assets and liabilities of Robinson Ltd were recorded at fair value except for a machinery which had a fair value of $120,000 greater than the carrying amount and inventories which had a fair value of $50,000 greater than its carrying amount. The machinery had a further expected useful life of 8 years. Approximately 60% of the inventories at the acquisition date had been sold to Lyndall Ltd in the year ended 31 May 2018, and the remaining 40% were sold in the year ended 31 May 2020 Robinson Ltd is regarded as an associate of Mildred Ltd, and accordingly, Mildred Lid applies the equity method of accounting for its investment in the associate. Time apportionment applies whenever necessary. The tax rate is 30%. The financial statements of Robinson Ltd over the years contained the following information: Financial 5 months to 1 June 1 June 1 June 2019 1 June 2020 period/year ended 31 May 2017 2017 to 31 2018 to 31 to 31 May to 31 May May 2018 May 2019 2020 2021 Profit(loss) for the $30,000 ($300,000) 60,000 $130,000 ($550,000) period year Dividends paid $10,000 $25,000 $10,000 $20,000 $10,000 Final dividends $10,000 paid on declared 19 June 2021 (AGM date 19 June 2021) FOREX reserve balance $3,000 $30,000 $40,000 $80,000 $60,000 at year end Additional financial Information: C1. The opening inventories of Robinson Ltd at 1 June 2019 included goods of $38,000 purchased from Mildred Lid at cost plus 25%. These inventores were all sold by 31 May 2020 C2. In May 2020, Robinson Ltd sold inventories to Mildred Ltd for $90,000 at a margin of 35% All of these inventories were still held by Mildred Ltd at 31 May 2020. 60% of these inventories were sold to third parties on April 2021 ACC20013 Company Accounting Assignment: Mildred Ltd Case Study (2nd season) Semester 2, 2020 c3. On 1 September 2018, Mildred Lid sold a leasehold land to Robinson Ltd for 579,500, with Mildred Ltd recording a profit before tax of $50,000. The leasehold land had a further 15 years life, with benefits expected to occur evenly in these years, C4. The constitution of Robinson Ltd requires approval of final dividends by shareholders at the Annual General Meeting before these can be declared or paid. C5. The amount due to/from the associates were as follows: At 31 May 2020 Amount due from the associate $252,000 Amount due to the associate $5,000 At 31 May 2021 $350,000 $5,000 26. During the financial year ended 31 May 2021. Robinson Ltd revalued its investment properties and reported other comprehensive income to gains on revaluation of investment properties of S30,000 before tax. C7 On 30 May 2021. Mildred Ltd acquired 25% interest in a joint venture, SVT Ltd, in which it invested $50,000. A cheque was issued for $50,000 on 31 May 2021 and was remained unpresented as at the year then ended. Mildred's accountant has yet to put through any adjustments necessary to reflect this acquisition as at 31 May 2021. The equity of SVT Ltd at the acquisition date consisted of share capital of $80,000 and retained earnings of $120,000. All the identifiable assets and liabilities of SVT Ltd were recorded at amounts equal to fair value except for: Patent Plant (cost $80,000) Inventories Carrying amount $60,000 $40,000 $21,600 Fair value $72,000 $48.000 $28,000 ACC20013 Company Accounting Assignment: Mildred Ltd Case Study 2nd season) Semester 2, 2020 The separate financial statements for Mildred Lid and Dawson Ltd were presented as follows: Mildred Ltd (Group of Companies) Statements of Profit or Loss and Other Comprehensive Income for the year ended 31 May 2021 Mildred Ltd Dawson Ltd $ $ Income Sales 2,596,560.00 1,779,300.00 Less) Sales returns and allowances (2,596 56) (1.779,30) Less) Discounts given (5,193.12) (3.558.60) Net Sales 2,588,770.32 1,773,962.10 Less) Cost of sales Less) Discounts received (1,220,383.20) 6,101.92 (533,790.00) 2,668.95 GROSS PROFIT 1,374,489.04 1,242,841.05 Add) Other income Dividend income Other income Management fee income Interest income Gain on sale of property, plant and equpment 10,100.00 100,000.00 290,000.00 35,000.00 120,000.00 71,000.00 280,000.00 796.000.00 30,000.00 189,000.00 329,100.00 (441,415.20) Less) Administrative and other expenses Salaries, wages and allowances Management fee expense Legal and professional fee Rental expense Depreciation expense - PPE Amortisation expense - leasehold land Amortisation expense - intangible assets Loss on disposal of property, plant and equipment Other expenses Less) Finance costs Interest expense PROFIT BEFORE TAX Less) Income tax expense PROFIT FOR THE YEAR (266,895.00) (120,000.00) (23,000.00) (20,000.00) (227,026.26) (2,336.00) (80,000,00) (372,900.00) (3,889.00) (13,000.00) (200,000.00) (563,000.00) (120,000 00) (308,500.00) (130,000.00) 366,284.84 (139,885.45) 226,399.39 (62,000 00) 422,183.79 (175,655.14) 245,528.65 100,000.00 Other comprehensive income for the year, after tax: Gains on revaluations of PPE Exchange differences on translating foreign operation Total Comprehensive income for the year 10 10,000.00 355,528.65 226,399.39 ACC20013 Company Accounting Assignment: Mildred Ltd Case Study (24 season) Semester 2, 2020 Mildred Ltd (Group of Companies) Statements of Financial Position as at 31 May 2021 Mildred Ltd $ Dawson Ltd $ ASSETS Non-current assets Property, plant and equipment: Freehold land Leasehold land Accumulated amortisation - Leasehold land Tech & machinery Accumulated depreciation - Tech & machinery Motor vehicles Accumulated depreciation - Motor vehicles Software equipment Accumulated depreciation - Software equipment Furniture & fittings Accumulated depreciation - Furniture & fittings Other non-current assets: Intangible assets Accumulated impairment losses - intangible assets Goodwill Accumulated impairment losses - goodwill Investment in Dawson Led Investment in Associates Accumulated impairment losses-associate Loan stock receivables Investment in Del Luna Korea Ltd Deferred tax assets Total non-current assets 100,000.00 385.000.00 (26,889.00) 1,285,000 00 (735.020.00) 400,000.00 (240,000.00 850,000.00 (478 125.00) 453,000.00 226,500.00 231,165.00 (17,336.00) 926, 147 80 (611 25755) 200,000.00 (160,000.00 450,000.00 (253,125.00) 289,000.00 (144,500.00) 100,000.00 130,000.00 (21,000 00) 39,000.00 2,535,000.00 190,000 DO 600.000.00 180,000.00 5,380,466.00 74,28571 150,000.00 1,273,379.97 Current assets Investments in unit trusts Inventories Trade receivables Other receivables Interest recevable Dividend receivable Amount due from associate Amount due from subsidiary Cash and cash equivalents Total current assets TOTAL ASSETS 190,000.00 612,000.00 1,700,000.00 600,000.00 65,000.00 118,500.00 260,000.00 250,000.00 813.433.39 4,608,933.39 9.989,399.39 266,293.58 676,000.00 1,525,000.00 787,267.15 20,000.00 30,000.00 509,542.48 3,814,103.21 5,087,483.18 11 Semester 2, 2020 ACC20013 Company Accounting Assignment: Mildred Ltd Case Study Mildred Ltd (Group of companies) Statements of Changes in Equity for the year ended 31 May 2021 Mildred Ltd Total General Reserve NCI Share Share Capital Capital Ordinary Preference Total Equity Retained Earnings Asset Software Revaluation development reserve reserve FOREX reserve 3,150,000 1,600,000 1,357,075.00 375,000 100,000 6,582,07500 6,582,075.00 70,000 30,000 326,399.39 326,399.39 Balance at 1 June 2020 Total comprehensive income for the year Transfers to general reserve Interim dividends paid Final dividends declared Balance at 31 May 2021 500,000 226,399 39 (500,000.00 1400,000.00 (310,000.00 373.47419 (400,000.00) (310,000.00 6.198.474.39 (400,000,00) (310,000.00 6.198 474 19 3,150,000 2,100,000 445.000 130,000 Dawson Ltd General Reserve Retained Larning Total Share Share Capital Capital Ordinary Preference NCI Total Equity Asset Software Revaluation development reserve reserve FOREX reserve 1,252,998 216,000 250,000 1,038,959.00 343,000 90,000 50,000 3,240,957.00 3,240,957.00 245,528.65 100,000 65.000 20,000 34,000 430,528.65 34,000.00 430,528.65 34,000.00 Balance at 1 June 2020 Total comprehensive income for the year Issuance of shares Transfers to general reserve Interim dividends paid Final dividends declared Preference dividends paid Balance at 31 May 2021 70,000 (70,000.00) (206,744.67 (156,62475) (18,000,00) 823.118.23 (206,744.67) (156,624.75) (18.000.00 70.000 3,324,116.23 (206,744.67 156.624.75) (18.000.00) 3.324 11623 1,252,998 250,000 320,000 155,000 443,000 12 ACC20013 Company Accounting Assignment: Mildred Ltd Case Study (20 season) Required for Section A (178 marks.): Semester 2, 2020 1) Prepare the Acquisition Analysis for the acquisitions of 0 Investment in subsidiary, and ) Investment in associates, showing all relevant workings (26 marks) 2) Prepare the Consolidation Worksheet Journal Entries for Mildred Ltd Group for the financial year ended 31 May 2021, showing all relevant workings and applications of AASB/IFRSs. List any assumptions that you may have The Journal Entries must include narration(s) and supporting computation(s) (wherever relevant). Explanations are needed whenever necessary (85 marks) 3) Prepare the Equity Accounting Journal Entries for inclusion in the consolidation worksheet of Mildred Lid at 31 May 2021 for the Investment in associates, showing all relevant workings and applications of AASB/IERSs. List any assumptions that you may have (35 marks) 4) Prepare the Consolidation Worksheets using Microsoft Excel for the financial year ended 31 May 2021 showing the consolidation journal entries, equity accounting applications and consolidated financial statements of Mildred Lid group of companies. (Hint: See 11 edition textbook pages 621-633 and 760-768 for guidance) (10 marks) 5) Prepare and present the Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 May 2021 and Consolidated Statement of Financial Position as at 31 May 2021 for Mildred Ltd and its group of companies in accordance with relevant AASBS/IFRSs. Show all relevant computations and applications (Hint: Refer to Chapter 5, 110 edition of the textbook forpresentation) (12 marks) [Additional maximum 10 Marks will be given for the overall presentation of assignment Students are advised to comply with typical accounts used in the Australian Approved Accounting Standards (AASBs) or IFRSs when determining the format or the presentation of the Consolidated Financial Statements SECTION A (178 marks) Part 1: Case Study - Acquisition of a subsidiary Mildred Ltd is a public listed company based in Borneo that are involved in software development technologies and also the provision of consultancy services related to information technology, software engineering and offshore software development. The Company is doing well but in need to improve on certain areas such as development of cybersecurity technologies. Hence, Mildred Ltd decided to acquire 75% of the share capital (cum div) and voting rights in Dawson Ltd (formerly known as Indigo Moon Ltd), a company which Mildred Ltd believes that it would assist in its plans to achieve further competitive advantage. The business combination occurred on 1 December 2013. Legal and accounting costs incurred by Mildred Ltd in undertaking this business combination amounted to $1,500. Costs to issue the shares to the A ordinary shareholders of Dawson Ltd were $900. On 1 June 2020, Indigo Moon Ltd changed its name to Dawson Ltd. Mildred Ltd obtained the following information extracts about Dawson Ltd as at the acquisition date: Non-current assets Goodwill $39 000 Current liabilities Dividend payable $60 505.59 Equity Share capital - Ordinary (549 999 fully paid shares) $1 099 998 - Preference (120 000 fully paid shares) $216 000 Retained earnings $360 000 General reserve $100 000 Software development reserve $50 000 In acquiring Dawson Ltd, Mildred Ltd agreed with the following terms of acquisition: Cash of $500,000, 75% of the amount to be paid on the acquisition date, with the balance due on 30 November 2015. The incremental borrowing rate for Mildred Ltd is 12%. Two shares in Mildred Ltd for every three shares held in Dawson Ltd. All shares issued by Mildred Ltd have a fair value of $5.00 per share. Preference shareholders in Dawson Ltd are to receive two fully paid shares in Mildred Ltd for every three shares held, or alternatively. $0.80 per share in cash payable at the acquisition date. Holders of 60,000 preference shares elected to receive cash. . Due to doubts as to whether the share price would remain at or above the $5.00 level, Mildred Ltd agreed to supply cash to the value of any decrease in the share price below $5.00. This guarantee was valid for a period of 6 months (to 31 May 2014). Mildred Ltd believed that there was a 80% chance that the share price would remain at or above $5.00 until 31 May 2014 (and a 20% chance that it would fall to $4.70). 3 You are the Group Financial Controller for Mildred Ltd and your accounting team is currently compiling financial information for the consolidated financial statements relating to the financial year ended 31 May 2021 for your auditors. 1 2 4 6 Eair Value Information of Dawson Ltd (subsidiary Mildred Ltd analysed the assets and liabilities of Dawson Ltd at the acquisition date and determined that the only assets and liabilities for which the fair value was different from the current recorded amount were: Note Carrying Fair value amount Trade receivables $ 200 000 $ 180 000 Freehold land 150 000 180 000 Software equipment (Cost = $229 977) 3 178 871 200 021 Inventories 100 000 190 000 Brands 5 60 000 Contingent liability NOTES: 1. Approximately 80% of the trade receivables at 1 December 2013 were fully collected by 31 May 2014 and the remaining 20% was fully recovered by 31 May 2020. 2. The land was sold during the financial year ended 31 May 2020 for $190,000. 3. The software equipment was considered to have a further useful life of 9 years and is depreciated on a straight-line basis. 4. In relation to the inventories held on the acquisition date, 25% were sold by 31 May 2014, 60% were sold by 31 May 2019 and the remaining 15% were written off for the financial year ended 31 May 2020. 5. Mildred Ltd also determined that the subsidiary had some internally generated brands with a fair value of $60,000 that were not recorded by Dawson Ltd because it did not meet the recognition criteria under AASB 138 Intangible Assets. These assets were estimated to have definite useful life of 20 years. 6. Dawson Ltd is currently being sued by a previous customer. The expected damages are $65,000. At the acquisition date, the lawyers had estimated that there was a 30% chance of losing the case. The liability for the litigation results in a payment of $15,000 in April 2021, with no further liability existing at 31 May 2021. The Group assumes that the fair value of the non-controlling interest (NCI) in the subsidiary at acquisition date to be $0.5 million. 7. Information on related party transactions (RPT): Previous Years' intragroup sales and purchases of inventories: 8. On 1 March 2019, Dawson Ltd sold inventories to Mildred Ltd for $200,000 at cost plus 20%. of these inventories, 28% remained on hand at 31 May 2020 and 8% remained on hand at 31 May 2021. 9. Mildred Ltd sold inventories with a sales margin of 35% to Dawson Ltd for $150,000 in May 2019. A quarter of these inventories was still held by Dawson Ltd at 31 May 2020. 10. On 11 February 2020, Mildred Ltd has on hand inventories worth $100,000 transferred from Dawson Ltd. The inventories had previously cost Dawson Ltd $50,000. By 31 May 2020, Mildred Ltd had sold $45,000 of the inventories to Maud Ltd, an external party. On 31 May 2021, Mildred Ltd had sold $20,000 of the same batch of inventories to Ross Ltd. Current Year's intragroup sales and purchases of inventories: 11. The inventories of Mildred Ltd included inventories purchased from Dawson Ltd for $300,000 on 16 June 2020. Dawson Ltd transferred these inventories to Mildred Ltd at cost plus 25% Other downstream transactions: 12. On 1 January 2018, Mildred Ltd sold a software equipment to Dawson Ltd for $250,000. The software equipment had originally cost Mildred Ltd $350,000 and the accumulated depreciation at the date of the disposal was $30,000. The asset was assessed as having a remaining useful life of seven years. 13. During the financial year ended 31 May 2020, Mildred Ltd charged its subsidiary management fee of $60,000. Dawson Ltd still owed its holding company 25% of the outstanding amount at 31 May 2020. In the financial year ended 31 May 2021, Mildred Ltd charged its subsidiary management fee of $10 000 per month and Dawson Ltd still owed its holding company $30,000 of unpaid management fees at 31 May 2021. Other upstream transactions: 14. On 1 June 2016, Mildred Ltd purchased loan stock issued by its subsidiary for $800,000. These loan stocks were payable over 6 years with an interest rate of 5.0% per annum Interest on the loan stock is paid yearly on the 31 March. Both companies accrue interest amounts every month. Interest income account was classified as other income' in Mildred Ltd.'s books and interest expense account were classified as "finance costs' in Dawson Ltd.'s books, Dawson Ltd has made payment of $200,000 on the principal loan on 1 January 2021. 15. On 1 May 2017, Dawson Ltd sold its internally generated cybersecurity software to Mildred Ltd for $130,000. At the time of its disposal it was estimated to have a definite useful life of 10 years using straight-line amortisation basis. 16. An interim dividend of $0.33 per share of 626,499 ordinary shares was paid by Dawson Ltd during the current financial year. 17. The final dividend of $0.25 each share for the 626,499 shares was declared by Dawson Ltd on 26 May 2021 from retained earnings and was paid subsequently on 16 June 2021. The constitution of the subsidiary allows directors to declare final dividend at any time and this is not subject to any further approval, authorisation or discretion. 18. Historically, the subsidiary raised further financing from external parties through the issuance of preference shares. Preference share dividends of $18,000 (2020: $12,000) was paid by the subsidiary during the financial year ended 31 May 2021. Other events: 19. Dawson Ltd is a separate cash-generating unit (CGU) for the group. As such, the management conducted an impairment test for purchased goodwill for indication of impairment on an annual basis. Mildred Ltd assessed that 15% of the total goodwill acquired by the Group was impaired at group level for the financial year ended 31 May 2019 in its investment in the subsidiary. It was further assessed that the goodwill above was impaired by additional 10% for each financial year ended 31 May 2020 and 31 May 2021. Impairment losses were classified as "Other expenses' accounts at group level. 20. The brands were assessed to be impaired by 10% per year, at Group level, as at 31 May 2020 and 31 May 2021, respectively. 21. On 3 March 2021, a vendor for the cybersecurity company billed Mildred Ltd $500,000 for some cybersecurity development work rendered for Mildred Ltd. However, Mildred Ltd disputed this invoice claiming that the vendor had breached some of the terms of the contract signed between them. The vendor then sued Mildred Ltd for non-payment of their bill issued to Mildred Mildred Ltd counter-sued the vendor for breaching the terms of the contract. The directors of Mildred Ltd estimated that the value of work done by this vendor as at 31 May 2021 was only $100,000. This case is still pending hearing by the Court which is scheduled to be held in September 2021. 22. The Group has legally enforceable rights to offset its tax liabilities with its tax assets. Accounting policies of the Group (extracts) The tax rate is 30%. Mildred Group Ltd uses the full goodwill method to prepare its consolidated financial statements in compliance with AASB 3/IFRS 3 Business Combinations and AASB 10/IFRS 10 Consolidated Financial Statements. Any adjustments for differences between carrying amounts at the acquisition date and fair values are made on consolidation. Business combination valuation reserve (BCVR) created are transferred on consolidation to retained earnings when assets are sold or fully consumed. The full effects of intragroup transactions are eliminated upon consolidation. When revalued assets are sold or fully consumed, any related revaluation surpluses are transferred to retained earnings 6 Part 2: Case Study - Acquisition of associates On 1 January 2017 Mildred Ltd acquired 32% of the shares (ex-div) of Robinson Ltd (formerly known as Timothy Ltd) for $190,000. On 1 June 2020, Timothy Ltd changed its name to Robinson Ltd. At this date, the equity of Robinson Ltd consisted of: Share capital (Ordinary shares of $1.30 each) $ 250 900 FOREX reserve 1 000 Retained earnings 138 000 389 900 At this date, all the identifiable assets and liabilities of Robinson Ltd were recorded at fair value except for a machinery which had a fair value of $120,000 greater than the carrying amount and inventories which had a fair value of $50,000 greater than its carrying amount. The machinery had a further expected useful life of 8 years. Approximately 60% of the inventories at the acquisition date had been sold to Lyndall Ltd in the year ended 31 May 2018, and the remaining 40% were sold in the year ended 31 May 2020. Robinson Ltd is regarded as an associate of Mildred Ltd, and accordingly, Mildred Ltd applies the equity method of accounting for its investment in the associate. Time apportionment applies whenever necessary. The tax rate is 30%. The financial statements of Robinson Ltd over the years contained the following information: Financial 5 months to 1 June 1 June 1 June 2019 1 June 2020 period/year ended 31 May 2017 2017 to 31 2018 to 31 to 31 May to 31 May May 2018 May 2019 2020 Profit(loss) for the $30,000 ($300,000) 60.000 $130,000 ($550,000) period/year Dividends paid $10,000 $25,000 $10,000 $20.000 $10,000 $10,000 paid on declared 19 June 2021 (AGM date = 19 June 2021) FOREX reserve balance $3,000 $30,000 $40,000 $80,000 $60,000 at year end 2021 Final dividends Additional financial information: C1. The opening inventories of Robinson Ltd at 1 June 2019 included goods of $38,000 purchased from Mildred Ltd at cost plus 25%. These inventories were all sold by 31 May 2020. C2. In May 2020, Robinson Ltd sold inventories to Mildred Ltd for $90,000 at a margin of 35%. All of these inventories were still held by Mildred Ltd at 31 May 2020. 60% of these inventories were sold to third parties on April 2021. ACC20013 Company Accounting Assignment: Mildred Ltd Case Study (2nd season) Semester 2, 2020 The separate financial statements for Mildred Ltd and Dawson Ltd were presented as follows: Mildred Ltd (Group of Companies) Statements of Profit or Loss and Other Comprehensive Income for the year ended 31 May 2021 Mildred Ltd Dawson Ltd Income Sales Less) Sales returns and allowances Less) Discounts given 2,596,560.00 (2.596.56) (5.193.12) 1,779,300.00 (1,779.30) (3,558.60) Net Sales 2,588,770.32 1,773,962. 10 Less) Cost of sales Less) Discounts received (1.220.383.20) 6,101.92 (533.790.00) 2.668.95 GROSS PROFIT 1,374,489.04 1,242,841.05 290,000.00 35,000.00 120,000.00 71,000.00 280,000.00 796 000.00 10,100.00 100,000.00 30,000.00 189.000,00 329,100.00 (441,415.20) Add) Other income Dividend income Other income Management fee income Interest income Gain on sale of property, plant and equipment Less) Administrative and other expenses Salaries, wages and allowances Management fee expense Legal and professional fee Rental expense Depreciation expense - PPE Amortisation expense - leasehold land Amortisation expense - intangible assets Loss on disposal of property, plant and equipment Other expenses Less) Finance costs Interest expense PROFIT BEFORE TAX Less) Income tax expense PROFIT FOR THE YEAR Other comprehensive income for the year, after tax: Gains on revaluations of PPE Exchange differences on translating foreign operation Total Comprehensive income for the year 10 (80,000.00) (372.900.00) (3.889.00) (13,000.00) (200,000.00) (563.000.00) (266,895.00) (120,000.00) (23,000.00) (20,000.00) (227,026.26) (2,336.00) (120,000.00) (308,500.00) (130,000.00) 366,284.84 (139,885.45) 226,399.39 (62,000.00) 422,183.79 (176,655.14) 245,528.65 100,000.00 10,000.00 355,528.65 226,399.39 ACC20013 Company Accounting Assignment Mildred Ltd Case Study (2 season) Semester 2.2020 Mildred Lad (Group of Companies) Statements of Financial Position as at 31 May 2021 Mildred Lid $ Dawson Ltd $ ASSETS Non-current assets Property, plant and equipment: Freehold land Leasehold land Accumulated amortisation - Leasehold land Tech & macery Accumulated depreciation - Tech & machinery Motor vehicles Accumulated depreciation - Motor vehicles Software equipment Rocumulated depreciation - Software equipment Fumiture & frings Accumulated depreciation - Future & fitings Other non-current assets: Intangible assets Acumulated impairment losses tangible assets Goodwill Accumulated impairmert losses - goodwill Investment in Dawson Lid Investment in Associates Accumulated parmente associate Loan stock receivables Investment in De Luna Korea Lid Deferred tax assets Total non-current assets 100 000.00 385.000.00 (26.889.00) 1285.000.00 (735.020.00) 400 000 00 240.000,00) 850,000.00 (478 12500) 453.000.00 226.500.00) 231,165.00 (17338.00 $26.54780 61125755) 200.000,00 (150.000.00 450.000.00 253 125.00 289.000.00 (144.500.00) 100,000.00 130 000 00 (2100000 39.000.00 2.535.000.00 190,000.00 600,000.00 180.000.00 5.380,466.00 7428571 150.000,00 1,272,379.97 Current assets Investments inunt trusts Invertones Trade receivables Other receives Interest receivable Dividend receive Amount Oue from associate Amout due from subsidiary Cash and cash equivalents Total current assets TOTAL ASSETS 190.000.00 612 000.00 1.700.000.00 600.00000 65.000.00 118.500.00 260.000.00 250,000.00 81343339 4,608.333.33 9.909, 399 39 266 283.58 678.000.00 1.525.000.00 787 267 15 20.000.00 30.000.00 509 542.43 3.814, 10321 5.087.483.18 11 ACC20013 Company Accounting Assignment Mildred Ltd Case Study (2 season) Semester 2, 2020 Midred Ltd Groun of Camoaniel Dashboard Calendar To-do Notifications Inbox ACC20013 Company Accounting Assignment: Mildred Ltd Case Study (2nd season) Semester 2, 2020 Mildred Ltd (Group of Companies) Statements of Financial Position as at 31 May 2021 Mildred Ltd $ Dawson Ltd $ 100,000.00 385,000.00 (26,889.00) 1,285,000.00 (735,020.00) 400,000.00 (240,000.00) 850,000.00 (478,125.00) 453,000.00 (226,500.00) 231,165.00 (17,336.00) 926,147.80 (611,257.55) 200,000.00 (160.000.00) 450,000.00 (253,125.00) 289,000.00 (144,500.00) 130,000.00 (21,000.00) 100,000.00 39,000.00 ASSETS Non-current assets Property, plant and equipment: Freehold land Leasehold land Accumulated amortisation - Leasehold land Tech & machinery Accumulated depreciation - Tech & machinery Motor vehicles Accumulated depreciation - Motor vehicles Software equipment Accumulated depreciation - Software equipment Furniture & fittings Accumulated depreciation - Furniture & fittings Other non-current assets: Intangible assets Accumulated impairment losses - intangble assets Goodwill Accumulated impairment losses - goodwill Investment in Dawson Lid Investment in Associates Accumulated impairment losses - associate Loan stock receivables Investment in Del Luna Korea Lid Deferred tax assets Total non-current assets Current assets Investments in unit trusts Inventories Trade receivables Other receivables Interest receivable Dividend receivable Amount due from associate Amount due from subsidiary Cash and cash equivalents Total current assets TOTAL ASSETS 2,535,000.00 190,000.00 600,000.00 180.000.00 5,380,466.00 74.285.71 150,000.00 1,273,379.97 190,000.00 612,000.00 1,700,000.00 600,000.00 65,000.00 118,500.00 260,000.00 250,000.00 813,433.39 4,608,933.39 9.989,399.39 266,293.58 676,000.00 1,525,000.00 787 267.15 20,000.00 30,000.00 509,542.48 3,814,103.21 5,087,483.18 11 Required for Section A (178 marks): 1) Prepare the Acquisition Analysis for the acquisitions of (0) Investment in subsidiary, and (ii) Investment in associates, showing all relevant workings. (26 marks) 2) Prepare the Consolidation Worksheet Journal Entries for Mildred Ltd Group for the financial year ended 31 May 2021, showing all relevant workings and applications of AASBS/IFRSs. List any assumptions that you may have. The Journal Entries must include narration(s) and supporting computation(s) (wherever relevant). Explanations are needed whenever necessary. (85 marks) 3) Prepare the Equity Accounting Journal Entries for inclusion in the consolidation worksheet of Mildred Ltd at 31 May 2021 for the Investment in associates, showing all relevant workings and applications of AASBs/IFRSs. List any assumptions that you may have. (35 marks) 4) Prepare the Consolidation Worksheets using Microsoft Excel for the financial year ended 31 May 2021 showing the consolidation journal entries, equity accounting applications and consolidated financial statements of Mildred Ltd group of companies. (Hint: See 19th edition textbook pages 621-633 and 760-768 for guidance) (10 marks) 5) Prepare and present the Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 May 2021 and Consolidated Statement of Financial Position as at 31 May 2021 for Mildred Ltd and its group of companies in accordance with relevant AASBS/IFRSs. Show all relevant computations and applications. (Hint: Refer to Chapter 5, 11th edition of the textbook for presentation) (12 marks) SECTION A (178 marks) Part 1: Case Study - Acquisition of a subsidiary Mildred Ltd is a public listed company based in Bomeo that are involved in software development technologies and also the provision of consultancy services related to information technology, software engineering and offshore software development. The Company is doing well but in need to improve on certain areas such as development of cybersecurity technologies. Hence, Mildred Ltd decided to acquire 75% of the share capital (cum div) and voting rights in Dawson Ltd (formerly known as Indigo Moon Ltd), a company which Mildred Ltd believes that it would assist in its plans to achieve further competitive advantage. The business combination occurred on 1 December 2013. Legal and accounting costs incurred by Mildred Ltd in undertaking this business combination amounted to $1,500. Costs to issue the shares to the A ordinary shareholders of Dawson Ltd were $900, On 1 June 2020. Indigo Moon Ltd changed its name to Dawson Ltd. Mildred Ltd obtained the following information extracts about Dawson Ltd as at the acquisition date: Non-current assets Goodwill $39 000 Current liabilities Dividend payable $60 505.59 Equity Share capital - Ordinary (549 999 fully paid shares) $1099 998 - Preference (120 000 fully paid shares) $216 000 Retained earnings $360 000 General reserve $100 000 Software development reserve S50 000 In acquiring Dawson Ltd, Mildred Ltd agreed with the following terms of acquisition: Cash of $500,000. 75% of the amount to be paid on the acquisition date, with the balance due on 30 November 2015. The incremental borrowing rate for Mildred Ltd is 12%. . Two shares in Mildred Ltd for every three shares held in Dawson Ltd. All shares issued by Mildred Ltd have a fair value of $5.00 per share. Preference shareholders in Dawson Ltd are t