Question (Ex. 29.21from Loftus et al) On 1 July 2015, Fin Ltd acquired 75% of the issued shares (cum dix) of Whale Ltd for 567 500. At this date the equity of Whale Ltd consisted of: Share capital General reserve Retained earnings $30 000 3000 15 000 At the date of the business combination, all the identifiable assets and liabilities of Whale Lid had carrying amounts equal to their fair values except for the following. Plant (cost $60000) Inventories Receivables Carrying amount $40 000 25 000 33 000 Fair value $55000 31000 30 000 The plant had a further useful life of 5 years. It was sold by Whale Ltd to external entities on 1 April 2020 for $3000. By 30 June 2016, all the inventories were sold to entities outside the group. Also, by 30 June 2016, receivables of 533 000 had been collected. One of the liabilities of Whale Ltd at 1 July 2015 was dividend payable of S10 000. The tax rate is 30%. Fin Ltd uses the partial goodwill method. Additional information At 30 June 2019, inventories of Fin Ltd included assets sold to it by Whale Ltd for a before-tax profit of $300. These items were sold to external entities during the year ended 30 June 2020. During the year ended 30 June 2020, Whale Ltd had sold inventories to Fin Ltd for S60 000. The mark-up on sales was 25% on cost. At 30 June 2020, Fin Ltd still had some of these inventories on hand, amounting to items acquired from Whale Ltd for $3000. On 1 January 2020, Whale Ltd sold plant to Fin Ltd for a before-tax profit of $1200. This plant was carried at $3000 (original cost $20 000) in the records of Whale Led at time of sale. Depreciation on this type of plant is calculated using a 20% p.a. straight line method. Financial information provided by Whale Ltd concerning events affecting it during the year ended 30 June 2020 was as follows. Profit for the year Retained earnings at 1 July 2019 Dividend paid Dividend declared Transfer to general reserve $ 23400 30 000 $53400 (12 000) 16 000) (1500) (19500) $ 33900 Retained earnings at 30 June 2020 The transfer to general reserve is from post-acquisition retained earnings. Whale Ltd also reported a comprehensive income for the year ended 30 June 2020 of 534 650, which included gains on revaluation of land of $750, as the asset revaluation surplus in relation to the land had increased from S3000 to $3750 over the year. Required Prepare the consolidation worksheet entries for the preparation of the consolidated financial statements of Fin Ltd at 30 June 2020. Consolidation Worksheet Entries at 30mne 2020 (in Ltd uses the partial goodwill method) Acquisition analysis at 1 July 2015 3/6 Business combination valuation entries Pre-acquisition entries NCI Step 1: NCI share of equity at acquisition date NCI Step 2: NCI share of changes in equity from 1/7/15 to 30/6/19 (prior period) NCI Step 3: NCI share of changes in equity from 1/7/19 to 30/6/20 (current period) Dividend paid to parent - elimination Dividend declared to parent - elimination Unrealised profit in beginning inventories: Whale Ltd - Fin Ltd Unrealised profit in ending inventories: Whale Ltd - Fin Ltd Unrealised profit on intragroup sale of plant: Whale Ltd - Fin Ltd Question (Ex. 29.21from Loftus et al) On 1 July 2015, Fin Ltd acquired 75% of the issued shares (cum dix) of Whale Ltd for 567 500. At this date the equity of Whale Ltd consisted of: Share capital General reserve Retained earnings $30 000 3000 15 000 At the date of the business combination, all the identifiable assets and liabilities of Whale Lid had carrying amounts equal to their fair values except for the following. Plant (cost $60000) Inventories Receivables Carrying amount $40 000 25 000 33 000 Fair value $55000 31000 30 000 The plant had a further useful life of 5 years. It was sold by Whale Ltd to external entities on 1 April 2020 for $3000. By 30 June 2016, all the inventories were sold to entities outside the group. Also, by 30 June 2016, receivables of 533 000 had been collected. One of the liabilities of Whale Ltd at 1 July 2015 was dividend payable of S10 000. The tax rate is 30%. Fin Ltd uses the partial goodwill method. Additional information At 30 June 2019, inventories of Fin Ltd included assets sold to it by Whale Ltd for a before-tax profit of $300. These items were sold to external entities during the year ended 30 June 2020. During the year ended 30 June 2020, Whale Ltd had sold inventories to Fin Ltd for S60 000. The mark-up on sales was 25% on cost. At 30 June 2020, Fin Ltd still had some of these inventories on hand, amounting to items acquired from Whale Ltd for $3000. On 1 January 2020, Whale Ltd sold plant to Fin Ltd for a before-tax profit of $1200. This plant was carried at $3000 (original cost $20 000) in the records of Whale Led at time of sale. Depreciation on this type of plant is calculated using a 20% p.a. straight line method. Financial information provided by Whale Ltd concerning events affecting it during the year ended 30 June 2020 was as follows. Profit for the year Retained earnings at 1 July 2019 Dividend paid Dividend declared Transfer to general reserve $ 23400 30 000 $53400 (12 000) 16 000) (1500) (19500) $ 33900 Retained earnings at 30 June 2020 The transfer to general reserve is from post-acquisition retained earnings. Whale Ltd also reported a comprehensive income for the year ended 30 June 2020 of 534 650, which included gains on revaluation of land of $750, as the asset revaluation surplus in relation to the land had increased from S3000 to $3750 over the year. Required Prepare the consolidation worksheet entries for the preparation of the consolidated financial statements of Fin Ltd at 30 June 2020. Consolidation Worksheet Entries at 30mne 2020 (in Ltd uses the partial goodwill method) Acquisition analysis at 1 July 2015 3/6 Business combination valuation entries Pre-acquisition entries NCI Step 1: NCI share of equity at acquisition date NCI Step 2: NCI share of changes in equity from 1/7/15 to 30/6/19 (prior period) NCI Step 3: NCI share of changes in equity from 1/7/19 to 30/6/20 (current period) Dividend paid to parent - elimination Dividend declared to parent - elimination Unrealised profit in beginning inventories: Whale Ltd - Fin Ltd Unrealised profit in ending inventories: Whale Ltd - Fin Ltd Unrealised profit on intragroup sale of plant: Whale Ltd - Fin Ltd