Question 2. 50 Marks On 1 July 2022, Ambrose Ltd acquired all voting rights of Beatrice Ltd by purchasing its shareholders' equity for $40,000 cash and issuing 50,000 shares at $1 each. Beatrice had $66,000 share capital and $10,000 retained earnings at that date. On 1 July 2022, the following assets were at carrying value on the balance sheet, which differed from fair value. Carrying amount $ Fair value $ Plant ($150,000) 125,000 130,000 Patent 60,000 75,000 Inventory 20,000 25,000 Following are additional information.

1) The estimated useful life of the Plant was five years.

2) The patent was sold for $80,000 to an external party on 1 August 2022.

3) The inventory held was sold to an external party on 31 January 2023.

4) Ambrose Ltd has sold inventory type A to Beatrice Ltd and had such inventory on 1 July 2023 worth $5,000. They were sold on 31 August 2023 to an external party at a $1,000 profit. 6 Prepared by Prof Indra Abeysekera 22 March 2024

5) On 1 September 2023, Beatrice sold inventory Type B to Ambrose Ltd. at a profit of $500. On 30 June 2024, Ambrose Ltd. had them unsold.

6) On 1 July 2023, Beatrice Ltd. sold a Plant to Ambrose Ltd for $15,000, which classified it as inventory. On 1 November 2023, Ambrose sold it to an external party for a profit of $1,000

. 7) The company income tax rate is 30%.

The following is information from the financial statements of Ambrose Ltd and Beatrice Ltd for the year ended 30 June 2024. Ambrose Beatrice Dr Cr Dr Cr Sales revenue 76,250 85,950 Cost of sales 41,400 53,350 Trading expenses 5,000 10,500 Office expenses 6,000 5,500 Depreciation expenses 1,800 3,900 Proceeds on sale of plant 9,000 15,000 Carrying amount of plant sold 7,500 12,000 Income tax expenses 2,100 7,300 Share capital 87,000 66,000 Retained earnings 48,000 31,500 Current liabilities 21,100 10,500 Deferred tax liability 11,000 15,000 Plant 57,000 105,000 Accumulated depreciation of Plant 19,800 31,200 Intangibles 12,000 11,100 Deferred tax asset 11,100 9,450 Shares in Beatrice 90,000 - Inventory 30,000 24,600 Receivables 8,250 12,450 272,150 272,150 255,150 255,150 7 Prepared by Prof Indra Abeysekera 22 March 2024 Required: Prepare consolidation worksheet to prepare consolidated financial statements of Ambrose Ltd as of 30 June 2024.

1. Acquisition analysis [5 marks]

2. Consolidation of journal entries [10 marks]

3. Consolidation worksheet [15 marks]

4. Consolidated statement of Profit and loss and other comprehensive income [5 marks]

5. Consolidated statement of financial position. [10 marks]

6. Consolidated statement of changes in equity. [5 marks