TEAM PROJECT: CONSOLIDATED FINANCIAL STATEMENTS Question One (20 marks) Madari Ltd purchased 100% of the shares of Concerto Ltd on 1 July 2020 for $70.000. On the date coacquisition, the equity of the two entities was as follows: Madari Ltdsi General Reserve Retained Earnings Share Capital 25,000 4,500 Concerto Ltd (S) 5.500 3,300 38.000 60.000 At 1 July 2020, all of the identifiable assess and liabilities of Concerto Lid were recorded at fair value exixipt tar the following: Carrying Amount (3) Fair Values luventory 3,000 4,500 Plant and Equipment 60.000 65,000 The plant and equipment had a further 5-year useful life. Any valuation adjustmentsare mati on consolidation All of the inventories were sold by December 2020. The assets of Concerto Lld included Goodwill with a value of $5,400. Financial information for both en Lilies for the year ended 30 und 2022 is shown below. Madari Li Concerto Lid 20,000 Slee nividual 39.000 7,200 HOO Total income 201,00 20003 Lost af sales Other experts 15,000 2.500 Total SCS 35,00 12,500 5,800 0 Gin on sale of equipment 2,100 5,700 Profil before LxuLxpense 5.800 1.500 1.7.15 4,3110 3,455 Protit for the period Retained carnings (1/7/21 Lalerian clividend paid Pinaldes dend decared Recaised earnings 130/6/22) 2.000 1,000 1.000 1,200 5.500 6,255 Additional information a) On the 1 January 2022, Mactari Itzich vanced $10,000 La Concerto lud. The interest Tate on the advance 15 6% pa payable monthly 11) Madari Ltd records Lividend receivable as revenue when dividends are declared. The beginning inventorius of Concerta Ild at 1 July 2021 included gors which cost Concerto Ltd $1,000. Concerto Ltd purchased these inventories from Madart Ltd for $ $1,3301 d) Intragroup sales totaled $5,000 for the period ended 30 June 2022. Sales from Madari d Lid to Concerto Ltd, at cost plus 10% mark-up, amounted to $2,800. The ending inventaries of Mandari 1.d included puds which cost Madari ltd S2,200. Madari 1.t purchased these inventories from Concerto Lid at cost plus 10% mark-up. e) Oct 31 December 2021, Concerto Lid sold all ile al equipment La Madari Lid lac $15,000. This pripment originally rast Concern Itd 515,000 hut at the time of the intra roup sale it had a carrying amount of $12,600. Madari Ltd depreciates the equipment at the rate of 10% pa. on Cost Concerto deprecated the equipment at 84 p.ll. cin cost f The sales revenue account for Madari Lid includes $3,000 earned from professional services provided to Concerto Lid in the year ended 30 June 2022. a) The income tax rate is 30% Required Prepare the acquisition analysis at 1 July 2020 ii. Prepare the business Combination valuation entries wide-acuisitius entries al 30 June 2021. 1 Prepare the business combination valuation entries and pre-acquisition entries at 30 June 2ozz. Prepare the consolidation worksheet journal entries to eliminate the effects of intragroup transactions at 30 lume 2022. Prepare the consolidation worksheet (in an Excel Spreadshect) for the preparation of the consolidated statement of financial performance for the year coded 30 June 2022 Tocals in your Excel spreadsheel should be calculated using functions Ilsing the consolidated worksheet, prepare the onsolidated statement of profit or loss and other compreensive income for the period ended 30 June 2022 withi Excel. IV. Question Two (5 marks) Peter Chou is the general manager of Madari Ltd. He believes that intragroup transactions can be included within cinsulidated lincial statements is long as the transaction represents fair value. That is, the value of the transaction is equivalent to an 'arm's length' transaction Requin Prepare a persuasive, but concise (no more than 350 words), response to Peter Chou. Mr Clou is not an accuuntatil a ensure that your explanation is understandable u al on accountant TEAM PROJECT: CONSOLIDATED FINANCIAL STATEMENTS Question One (20 marks) Madari Ltd purchased 100% of the shares of Concerto Ltd on 1 July 2020 for $70.000. On the date coacquisition, the equity of the two entities was as follows: Madari Ltdsi General Reserve Retained Earnings Share Capital 25,000 4,500 Concerto Ltd (S) 5.500 3,300 38.000 60.000 At 1 July 2020, all of the identifiable assess and liabilities of Concerto Lid were recorded at fair value exixipt tar the following: Carrying Amount (3) Fair Values luventory 3,000 4,500 Plant and Equipment 60.000 65,000 The plant and equipment had a further 5-year useful life. Any valuation adjustmentsare mati on consolidation All of the inventories were sold by December 2020. The assets of Concerto Lld included Goodwill with a value of $5,400. Financial information for both en Lilies for the year ended 30 und 2022 is shown below. Madari Li Concerto Lid 20,000 Slee nividual 39.000 7,200 HOO Total income 201,00 20003 Lost af sales Other experts 15,000 2.500 Total SCS 35,00 12,500 5,800 0 Gin on sale of equipment 2,100 5,700 Profil before LxuLxpense 5.800 1.500 1.7.15 4,3110 3,455 Protit for the period Retained carnings (1/7/21 Lalerian clividend paid Pinaldes dend decared Recaised earnings 130/6/22) 2.000 1,000 1.000 1,200 5.500 6,255 Additional information a) On the 1 January 2022, Mactari Itzich vanced $10,000 La Concerto lud. The interest Tate on the advance 15 6% pa payable monthly 11) Madari Ltd records Lividend receivable as revenue when dividends are declared. The beginning inventorius of Concerta Ild at 1 July 2021 included gors which cost Concerto Ltd $1,000. Concerto Ltd purchased these inventories from Madart Ltd for $ $1,3301 d) Intragroup sales totaled $5,000 for the period ended 30 June 2022. Sales from Madari d Lid to Concerto Ltd, at cost plus 10% mark-up, amounted to $2,800. The ending inventaries of Mandari 1.d included puds which cost Madari ltd S2,200. Madari 1.t purchased these inventories from Concerto Lid at cost plus 10% mark-up. e) Oct 31 December 2021, Concerto Lid sold all ile al equipment La Madari Lid lac $15,000. This pripment originally rast Concern Itd 515,000 hut at the time of the intra roup sale it had a carrying amount of $12,600. Madari Ltd depreciates the equipment at the rate of 10% pa. on Cost Concerto deprecated the equipment at 84 p.ll. cin cost f The sales revenue account for Madari Lid includes $3,000 earned from professional services provided to Concerto Lid in the year ended 30 June 2022. a) The income tax rate is 30% Required Prepare the acquisition analysis at 1 July 2020 ii. Prepare the business Combination valuation entries wide-acuisitius entries al 30 June 2021. 1 Prepare the business combination valuation entries and pre-acquisition entries at 30 June 2ozz. Prepare the consolidation worksheet journal entries to eliminate the effects of intragroup transactions at 30 lume 2022. Prepare the consolidation worksheet (in an Excel Spreadshect) for the preparation of the consolidated statement of financial performance for the year coded 30 June 2022 Tocals in your Excel spreadsheel should be calculated using functions Ilsing the consolidated worksheet, prepare the onsolidated statement of profit or loss and other compreensive income for the period ended 30 June 2022 withi Excel. IV. Question Two (5 marks) Peter Chou is the general manager of Madari Ltd. He believes that intragroup transactions can be included within cinsulidated lincial statements is long as the transaction represents fair value. That is, the value of the transaction is equivalent to an 'arm's length' transaction Requin Prepare a persuasive, but concise (no more than 350 words), response to Peter Chou. Mr Clou is not an accuuntatil a ensure that your explanation is understandable u al on accountant