Question 2.

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 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.

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

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]