Question
QUESTION 2 [53 Marks] The following financial statements of Greg Ltd and its subsidiary Wayne Ltd have been extracted from their financial records at 30
QUESTION 2 [53 Marks]
The following financial statements of Greg Ltd and its subsidiary Wayne Ltd have been extracted from their financial records at 30 June 2022.
Additional information:
- Greg Ltd acquired its 100 per cent interest in Wayne Ltd on 1 July 2017, that is, five years earlier.
Share capital | $200000 |
Retain earnings | $180000 |
Total | $380000 |
At the date of acquisition all assets were considered to be fairly valued.
- During the year Greg Ltd made total sales to Wayne Ltd of $60 000, while Wayne Ltd sold $50 000 in inventory to Greg Ltd.
- The opening inventory in Greg Ltd as at 1 July 2021 included inventory acquired from Wayne Ltd for $40 000 that cost Wayne Ltd $30 000 to produce.
- The closing inventory in Greg Ltd includes inventory acquired from Wayne Ltd at a cost of $33 000. This cost Wayne Ltd $28 000 to produce.
- The closing inventory of Wayne Ltd includes inventory acquired from Greg Ltd at a cost of $12 000. This cost Greg Ltd $10 000 to produce.
- On 1 July 2021 Wayne Ltd sold an item of plant to Greg Ltd for $116 000 when its carrying value in Wayne Ltds accounts was $81 000 (cost $135 000, accumulated depreciation $54 000). This plant is assessed as having a remaining useful life of six years. The Group has a policy of measuring its property, plant and equipment using the cost model.
- Wayne Ltd paid $26 500 in management fees to Greg Ltd.
- The tax rate is 30 per cent.
Required:
(A) Prepare acquisition analysis showing goodwill or gain on bargain purchase. [4 marks]
(B) Prepare acquisition journal entries consolidation journal entries. [16 marks]
(C) Prepare consolidation worksheet [10 marks]
(D) Prepare statement of profit and loss and other comprehensive incomeof Greg Ltd and its subsidiaries for the year ended 30 June 2022. [8 marks]
(E) Prepare Consolidated statement of financial position of Greg Ltd and its subsidiaries as at 30 June 2022. [10 marks]
(F) Prepare Consolidated statement of changes in equity for the year ended 30 June 2022. [5 marks]
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