Q1

Consolidation worksheet entries

Ben Ltd operates a number of supermarkets with an emphasis on the supply of quality produce

The operations of Sam Ltd are primarily in the fine fruit market. Believing that the acquisition

of Sam Ltd would enable Ben Ltd to expand its supply of quality produce to its customers, Ben

Ltd commenced actions to acquire the shares of Sam Ltd. On 1 July 2013, Ben Ltd acquired all

the issued shares (cum div.) of Sam Ltd for $123 500. At this date the equity of Sam Ltd

consisted of:

Share capital

Reserves

Retained earnings $100 000

5 000

10 000 On 1 July 2013, Sam Ltd had recorded a dividend payable of $6000 and goodwill of $5000

(net of accumulated impairment losses of $7000). The dividend was paid in August 2013. In the

previous year's annual report Sam Ltd had reported the existence of a contingent liability for

damages based upon a lawsuit by a customer who had slipped on some fallen fruit in one of the

stores operated by Sam Ltd. Ron Ltd calculated that this liability had a fair value of $10 000.

Sam Ltd also had some customer databases that were not recorded as assets but Ron Ltd placed

affair value of $6000 on these items. Sam Ltd believed that the databases had a future life of

4 years.

All of the identifiable assets and liabilities of Sam Ltd were recorded at amounts equal to their

fair values except for the following:

Plant (cost $120 000)

Land

Inventory Carrying amount

$94 000

80 000

20 000 Fair value

$96 000

85 000

24 000 The plant had an expected remaining useful life of 10 years. The land was sold by Sam Ltd in

February 2015. The inventory was all sold by 30 June 2014.

In February 2016, Sam Ltd transferred $3000 of the reserves on hand at 1 July 2013 to

retained earnings. The remaining $2000 was transferred in February 2017.

The court case involving the damages sought by the customer was settled in May 2017.

Sam Ltd was required to pay $7500 to the customer.

Required

Prepare the consolidation worksheet entries for the preparation by Sam Ltd of its consolidated

financial statements at 30 June 2017. Q2

The following details are taken from the accounting records of Mercy Ltd as at 30 June

2016:

Debit

Credit

Plant and equipment (net of depreciation)

$ 800 000

Land

600 000

Buildings (net of depreciation)

900 000

Investments (long-term)

460 000 Accounts receivable

Allowance for impairment of receivables

Inventory

Bank overdraft

Accounts payable

Dividend payable

Goodwill (net of impairment)

Share capital (3 200 000 shares)

General reserve

Retained earnings

Income tax payable

Other debtors 600 000

$ 60 000 520 000

200 000

400 000

256 000

300 000

2 400 000

290 000

375 000

249 000

50 000

$4 230 000 $4 230 000 Additional information

(a) Profit for the year was $581 000.

(b) Balance of retained earnings at 1 July 2015 was $80 000.

(c) During the year $30 000 was transferred from retained earnings to general reserve.

(d) A final dividend of 8c per share has been declared by directors and is not subject to

shareholders' approval.

Required

Prepare the statement of financial position and statement of changes in equity to comply

with AASB 101. Include Notes to the accounts for the above financial statements