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You are a senior accountant in an accounting firm in Australia. Your senior manager has asked you to assist your client, Cherry Ltd , in

You are a senior accountant in an accounting firm in Australia. Your senior manager has asked you to assist your client, Cherry Ltd, in the preparation of consolidated financial statements for the year ended 30 June 2035. The senior manager hands you a file which contains important information about Cherry Ltd and the acquisition of Blossom Ltd.
On 1 July 2033, Cherry Ltd acquired all the issued shares (ex. div) of Blossom Ltd for $944,000. At this date the equity of Blossom Ltd consisted of:
Share capital: $600,000
General reserve: $192,000
Retained earnings: $112,000The identifiable assets and liabilities recorded on the balance sheet of Blossom Ltd were at amounts equal to fair value. Additional information:
Adjustments for differences between carrying amounts and fair values at acquisition date are made on consolidation.
The tax rate is 30%.
On the day of acquisition, the balance sheet of Blossom Ltd included goodwill of $20,000.
On the day of acquisition, Cherry Ltd identified a publishing title with a fair value of $10,000 that was not
recorded on the balance sheet of Blossom Ltd.
The publishing title was considered to have an indefinite useful life.
The goodwill acquired by Cherry Ltd has been impaired by $20,000 on 30 June 2035.
On 1 January 2035 Blossom Ltd sold inventories to Cherry Ltd for $100,000. Half of the inventories were still on
hand at 30 June 2035. The inventory cost Blossom Ltd $60,000.
On 1 January 2034 Blossom Ltd sold inventory to Cherry Ltd for $8,000 which cost $4,000. Cherry Ltd treated
this inventory as equipment and depreciates this item at 10% per annum on a straight-line basis.
Financial information for Cherry Ltd and Blossom Ltd for the year ended 30 June 2035 is shown on the following page.
Required:
1. Prepare the consolidation journal entries required to prepare the consolidated accounts for Cherry Ltd Group as at 30 June 2035.
2. Prepare the consolidation worksheet for the Cherry Ltd Group as at 30 June 2035.
3. Prepare the consolidated financial statements for the Cherry Ltd Group the year ended 30 June 2035.
Note: the consolidated financial statements include: consolidated statement of profit and loss and other comprehensive income, consolidated statement of changes in equity, and the consolidated statement of financial position. You are not required to prepare a consolidated statement of cashflows.Financial Information for the year ended 30 June 2035
\table[[,Cherry Ltd,Blossom Ltd],[Sales revenue,2,381,000,1,867,000
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