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The financial statements of Chiffon Ltd and its subsidiary, Cake Ltd, at the 30 June 2015 contained the following information: Chiffon Ltd $ Cake Ltd

The financial statements of Chiffon Ltd and its subsidiary, Cake Ltd, at the 30 June 2015 contained the following information:

Chiffon Ltd $

Cake Ltd $

Profit before tax

3200

1800

Income tax expense

1300

240

Profit for the year

1900

1560

Retained Earnngs (1/7/14)

1500

2100

3400

3660

Dividend paid

500

0

Retained earnings (30/6/15)

2900

3660

Share capital

25000

10000

General reserve

8000

3000

Other components of equity *

1000

500

Liabilities

5000

1300

41900

18460

Land

8600

5100

Plant

17000

8000

Accumulated depreciation

(5000)

(1000)

Financial assets

3000

2000

Inventory

3000

4000

Cash

300

360

Shares in Cake Ltd

15000

-

41900

18460

* This relates to the available-for-sale assets financial assets. The balance of the accounts at 1/7/14 were $1500 (Chiffon Ltd) and $300 (Cake Ltd).

Chiffon Ltd had acquired al the shares capital of Cake Ltd on 1 July 2013 for $15000 when the equity of Cake Ltd consisted of:

Share capital 10000 shares

$10000

General reserve

$2000

Retained earnings

$1500

At the acquisition date by Chiffon Ltd, Cake Ltd.s non-monetary assets consisted of:

Carrying amount $

Fair Value $

Land

4000

6000

Plant (cost $6000)

5500

6500

Inventory

3000

4000

Additional information:

The plant had a further 5-year life.

All the inventory was sold by 30 June 2014.

All valuation adjustments to non-current assets are made on consolidation.

The land was sold in January 2015 for $6000.

The relevant business combination valuation reserves are transferred, on consolidation, to retained earnings.

In September 2013, Cake Ltd transferred $500 from its general reserve, earned before 1 July 2013, to retained earnings.

The tax rate is 30%.

***Can you show workings of the following parts?

a. Calculate gain or loss on purchase

b. Prepare the valuation entries at 1 July 2015

c. Prepare the consolidation worksheet

d. Prepare the Consolidated Statement of Comprehensive Income for the financial year ending 30 June 2015

e. Prepare the Consolidated Statement of Changes in Equity for the financial year ending 30 June 2015

f. Prepare the Consolidated Statement of Financial Position for the financial year ending 30 June 2015

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