Sky Ltd acquired all of the shares of Cloud Ltd on 1 July 2018 At this date, the equity of Cloud Ltd consisted of Share capital $100,000 Retained earnings 37,000 General reserve 10,000 All the identifiable assets and liabilities of Cloud Ltd were recorded at amounts equal to their fair values except for Carrying amount Fair value Plant (Cost $88,000) $60,000 $62,500 Land 50,000 55,000 Inventories 35,000 32,000 The plant was expected to have a further useful life of 5 years The land was sold to Rain Ltd on 1 January 2021 for $77,000 All inventories were sold to Wet Ltd by 30 June 2019 at $5,800 profit Included in the assets of Cloud Ltd at the acquisition date is a goodwill of $500 At 1 July 2018, Cloud Ltd had unrecorded trademark that had a fair value of $18,000 The trademark has an indefinite life Additional information Cloud Ltd had inventory on hand at 1 July 2020 at cost of $8,000 that had been sold to it by Sky Ltd This inventory had cost Sky Ltd $9,000 It was all sold by Cloud Ltd by 30 June 2021 at a profit of $1,500 During the 202021 period, Cloud Ltd sold inventory to Sky Ltd for $48,000 The inventory was carried at cost in Cloud Ltds book at $45,000 At 30 June 2021, a quarter of this inventory is still on hand Notes payables issued by Sky Ltd are held by Cloud Ltd Interests are paid on 1 July each year The tax rate is 30 Financial information provided by the two companies at 30 June 2021 is as shown below Sky Ltd Cloud Ltd Sales revenue 290,900 174,000 Gain on sale of PPE 5,800 Interest revenue 25,000 Dividends revenue 25,400 Total revenue 347,100 174,000 Cost of sales 135,600 85,400 Depreciation expense 23,000 15,000 Administrative expense 22,000 9,800 Interest expense 12,000 18,000 Total expense 192,600 128,200 Profit before tax 154,500 45,800 Income tax expense 42,550 14,800 Profit after tax 111,950 31,000 Retained earnings 30 June 2020 300,500 48,000 Dividend paid 21,000 8,000 Dividend declared 23,000 9,500 Retained earnings 30 June 2021 368,450 61,500 Share capital 500,000 100,000 General reserve 11,200 8 Notes payable 200,000 Deferred tax liabilities 8,600 2,000 Interest payable 17,000 20,000 Dividend payable 45,000 9,500 Total equity and liabilities $939,050 $404,200 Investment in Cloud Ltd 165,000 Plant 180,000 88,000 Accumulated depreciation plant 47,000 28,000 Notes receivable 200,000 Land 193,700 186,000 Deferred tax asset 5,000 1,000 Goodwill 500 Inventories 138,050 95,000 Dividend receivable 41,950 Interest receivable 22,000 Accounts receivable 13,350 22,200 Cash 27,000 39,500 Total assets $939,050 $404,200 Required a) Prepare the consolidated worksheet entries for Sky Ltd at 30 June 2021 50 mark b) Prepare the consolidated worksheet for Sky Ltd at 30 June 2021 30 mark c) Prepare the Consolidated Statement of Financial Position for Sky Ltd at 30 June 2021 in accordance to IAS 1 AASB 101 Presentation of Financial Statements (hint refer to Para 54)

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Posted on May 14, 2021

Sky Ltd acquired all of the shares of Cloud Ltd on 1 July 2018. At this date, the equity of Cloud Ltd consisted of: Share

Sky Ltd acquired all of the shares of Cloud Ltd on 1 July 2018. At this date, the equity of Cloud Ltd consisted of:

Share capital	$100,000
Retained earnings	37,000
General reserve	10,000

All the identifiable assets and liabilities of Cloud Ltd were recorded at amounts equal to their fair values except for:

	Carrying amount	Fair value
Plant (Cost $88,000)	$60,000	$62,500
Land	50,000	55,000
Inventories	35,000	32,000

The plant was expected to have a further useful life of 5 years.

The land was sold to Rain Ltd on 1 January 2021 for $77,000.

All inventories were sold to Wet Ltd by 30 June 2019 at $5,800 profit.

Included in the assets of Cloud Ltd at the acquisition date is a goodwill of $500.

At 1 July 2018, Cloud Ltd had unrecorded trademark that had a fair value of $18,000. The trademark has an indefinite life.

Additional information

Cloud Ltd had inventory on hand at 1 July 2020 at cost of $8,000 that had been sold to it by Sky Ltd. This inventory had cost Sky Ltd $9,000. It was all sold by Cloud Ltd by 30 June 2021 at a profit of $1,500.
During the 2020–21 period, Cloud Ltd sold inventory to Sky Ltd for $48,000. The inventory was carried at cost in Cloud Ltd’s book at $45,000. At 30 June 2021, a quarter of this inventory is still on hand.
Notes payables issued by Sky Ltd are held by Cloud Ltd. Interests are paid on 1 July each year.
The tax rate is 30%.
Financial information provided by the two companies at 30 June 2021 is as shown below:

	Sky Ltd	Cloud Ltd
Sales revenue	290,900	174,000
Gain on sale of PPE	5,800	-
Interest revenue	25,000	-
Dividends revenue	25,400	-
Total revenue	347,100	174,000
Cost of sales	135,600	85,400
Depreciation expense	23,000	15,000
Administrative expense	22,000	9,800
Interest expense	12,000	18,000
Total expense	192,600	128,200
Profit before tax	154,500	45,800
Income tax expense	42,550	14,800
Profit after tax	111,950	31,000
Retained earnings 30 June 2020	300,500	48,000
Dividend paid	21,000	8,000
Dividend declared	23,000	9,500

Retained earnings 30 June 2021	368,450	61,500
Share capital	500,000	100,000
General reserve	-	11,200

8% Notes payable	-	200,000
Deferred tax liabilities	8,600	2,000
Interest payable	17,000	20,000
Dividend payable	45,000	9,500
Total equity and liabilities	$939,050	$404,200

Investment in Cloud Ltd	165,000	-
Plant	180,000	88,000
Accumulated depreciation-plant	47,000	28,000
Notes receivable	200,000	-
Land	193,700	186,000
Deferred tax asset	5,000	1,000
Goodwill		500

Inventories	138,050	95,000
Dividend receivable	41,950	-
Interest receivable	22,000
Accounts receivable	13,350	22,200
Cash	27,000	39,500
Total assets	$939,050	$404,200

Required:

a) Prepare the consolidated worksheet entries for Sky Ltd at 30 June 2021. 50 mark

b) Prepare the consolidated worksheet for Sky Ltd at 30 June 2021. 30 mark

c) Prepare the Consolidated Statement of Financial Position for Sky Ltd at 30 June 2021 in accordance to IAS 1/AASB 101 Presentation of Financial Statements (hint: refer to Para 54).