1. Rule Ltd acquired all the issued capital of Book Ltd on 1 July 2014 for $1,500,000. At that date the shareholders' equity of Book Ltd was:

Share Capital $1,100,000

Retained Earnings $300,000

Additional information for the year ended 30 June 2016:

Inter-company sales:

Rule Ltd to Book Ltd $11,000

Book Ltd to Rule Ltd $19,000

Unrealised profits in closing inventory as at 30 June 2016 is $2,400 for goods sold by Book Ltd to Rule Ltd and $1,200 for goods sold by Rule Ltd to Book Ltd.

Unrealised profit in opening inventory for goods sold by Rule Ltd to Book Ltd as at 1 July 2015 is $2,100 and for goods sold by Book to Rule is $1,400.

Rule Ltd employees provide legal advice to Book Ltd. For these services, Book Ltd pays an annual fee of $8,000 per annum.

The final dividend of $16,500, declared as at 30 June 2015, was paid by Book Ltd in October 2015.

An interim dividend of $14,000 was paid on 31 January and a final dividend was declared $20,000 at 30 June, 2016.

On 30 June 2016, Rule Ltd purchased a motor vehicle from Book Ltd for $15,000. Book Ltd made profit on this sale of $3,500.

Book Ltd raised funds from Rule Ltd by borrowing $100,000 at an interest rate of 10% per annum. The annual interest charge was paid by Book Ltd on 30 June 2016.

The directors review the balance of goodwill each year. They agree that for the year ended 30 June 2016, goodwill is to be unpaired by $20,000.

Students must complete and submit the Consolidation worksheet provided in Microsoft Excel (FNSACC514_AT3_TMP_Q2&3_ V1).

Condolidations Worksheet 30 June 2016 Rule Ltd Book Ltd Sales Less Cost of Sales Inventory 0107/2015 Purchases Inventory 30/06/2016 Cost of Goods Sold Gross Profit Legal fees received Gain on sale of plant Dividends received Interest received from Book Ltd Less: Expenses selling expenses - Admin expenses - Financial expenses Operating profit before tax Less tax expense Profit after tax Retained earnings 0107/2015 Available for appropriation Appropriations Interim dividend paid Final dividend declared Total appropriations Retained earnings 30/06/2016 Share capital Loan from Rule Ltd Accounts payable Dividends payable Taxation Payable Property, plant & equipment (net) Shares in Book Ltd Loan to Book Ltd. Other non-current assets Inventory Other current assets Goodwill on consolidation 1,485,000 120,000 625,000 745,000 115,000 630,000 855,000 8,000 30,500 10,000 903,500 80,000 291,500 52,000 423,500 480,000 144,000 336,000 588,000 924,000 80,000 140,000 220,000 704,000 2,000,000 72,000 140,000 94,000 3,010,000 732,000 1,500,000 100,000 335,000 115,000 228,000 3,010,000 825,000 52,000 313,000 365,000 49,000 316,000 509,000 3,500 512,500 35,500 314,000 8,000 357,500 155,000 46,500 108,500 421,500 530,000 14,000 20,000 34,000 496,000 1,100,000 100,000 36,000 20,000 25,000 1,777,000 900,000 650,000 49,000 178,000 1,777,000 Eliminations Cr 30,000 3,600 8,000 3,500 30,500 10,000 20,000 303,500 1,100,000 100,000 20,000 Dr 100,000 1,729,100 3,500 30,000 8,000 10,000 16,500 14,000 20,000 3,500 1,500,000 100,000 3,600 20,000 1,729,100 Consolidate d Accounts Condolidations Worksheet 30 June 2016 Rule Ltd Book Ltd Sales Less Cost of Sales Inventory 0107/2015 Purchases Inventory 30/06/2016 Cost of Goods Sold Gross Profit Legal fees received Gain on sale of plant Dividends received Interest received from Book Ltd Less: Expenses selling expenses - Admin expenses - Financial expenses Operating profit before tax Less tax expense Profit after tax Retained earnings 0107/2015 Available for appropriation Appropriations Interim dividend paid Final dividend declared Total appropriations Retained earnings 30/06/2016 Share capital Loan from Rule Ltd Accounts payable Dividends payable Taxation Payable Property, plant & equipment (net) Shares in Book Ltd Loan to Book Ltd. Other non-current assets Inventory Other current assets Goodwill on consolidation 1,485,000 120,000 625,000 745,000 115,000 630,000 855,000 8,000 30,500 10,000 903,500 80,000 291,500 52,000 423,500 480,000 144,000 336,000 588,000 924,000 80,000 140,000 220,000 704,000 2,000,000 72,000 140,000 94,000 3,010,000 732,000 1,500,000 100,000 335,000 115,000 228,000 3,010,000 825,000 52,000 313,000 365,000 49,000 316,000 509,000 3,500 512,500 35,500 314,000 8,000 357,500 155,000 46,500 108,500 421,500 530,000 14,000 20,000 34,000 496,000 1,100,000 100,000 36,000 20,000 25,000 1,777,000 900,000 650,000 49,000 178,000 1,777,000 Eliminations Cr 30,000 3,600 8,000 3,500 30,500 10,000 20,000 303,500 1,100,000 100,000 20,000 Dr 100,000 1,729,100 3,500 30,000 8,000 10,000 16,500 14,000 20,000 3,500 1,500,000 100,000 3,600 20,000 1,729,100 Consolidate d Accounts