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: $$112,000$

The 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

Consolidated worksheet template should include:

Account Cherry Ltd Blossom Ltd Eliminations DR Eliminations CR Consolidated

Financial Information for the year ended $30$ June $2035$