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QUESTION

Using the information below and the financial statementson the following page, prepare the following at 30 June 2013:

A. adjustment/elimination journal entries for consolidation; and

B. consolidation worksheetand detailed calculation of non-controlling interest balance; and

C. consolidated financial statements and statements of changes in equity of Platypus Limited and its controlled entities.

INFORMATION

1. On 1 January 2007 Platypus Ltd purchased 100% of the issued capital of Emu Ltd for $650,000 cash. On acquisition Emu Ltd accounts showed: Share capital $700,000 and Retained earnings $159,000. All assets and liabilities were recorded at fair value except for land that was undervalued by $80,000.

2. On 1 July 2008Platypus Ltd and Emu Ltd each acquired 35% of the issued capital of Koala Ltd for a combined total of $400,000 cash. The balance sheet of Koala Ltd at the acquisition date showed: Share capital $250,000 and Retained earnings $56,000. All assets and liabilities were recorded at fair value except foran item of plant that was undervalued by $30,000. At that time the plant had a remaining life of 6 years and accumulated depreciation of $24,000. The plant was still on hand at 30 June 2013.

For the year ended 30 June 2013:

3. On 1 July 2012Koala Ltd sold an item of plant to Emu Ltd for $72,750 when its carrying value in Koala's books was $69,000 (original cost $110,400 and original estimated life of 12 years). 

4. The opening inventory on 1 July 2012 in Platypus Ltd included stock of $29,000 acquired from Emu Ltd.

5. During the year Emu Ltd made sales of inventory to Koala Ltd of $116,000, while Koala Ltd sold $184,000 of inventory to Platypus Ltd.

6. Closing inventories on 30 June 2013 included the following: Platypus Ltd $55,000 (bought from Koala Ltd) and Koala Ltd $28,000 (bought from Emu Ltd).

7. Platypus Ltd charged management fees to both Emu Ltd and Koala Ltd. Emu Ltd also charged management fees to Koala Ltd.

8. Dividends were declared/paid by the three companies.

AT 30 JUNE 2013

PLATYPUS LTD

EMU LTD

KOALA LTD

 

$

$

$

INCOME STATEMENTS



 

Sales revenue

1,413,500

978,300

777,100

Cost of goods sold

798,000

538,060

427,400

Gross profit

615,500

440,240

349,700

Other income



 

Management fee revenue

22,600

21,000

 -

Dividend revenue

222,750

36,750

 -

Gain on sale of plant

 -

 -

3,750

Expenses



 

Depreciation expense

(126,200)

(49,000)

(93,700)

Management fee expense

 -

(12,600)

(31,000)

Other expenses

(326,100)

(263,800)

(221,400)

Profit before tax

408,550

172,590

7,350

Income tax expense

(127,200)

(50,050)

(2,400)

Profit for the year after tax

281,350

122,540

4,950

Retained earnings at start of year

659,100

434,000

243,900

Dividend paid/declared

(250,000)

(186,000)

(105,000)

Retained earnings at year end

690,450

370,540

143,850

 



 

BALANCE SHEETS



 

Equity



 

Share capital

850,000

700,000

250,000

Retained earnings

690,450

370,540

143,850

Current Liabilities



 

Accounts payable

184,000

71,010

114,750

Income tax payable

125,900

66,700

2,600

Dividends payable

125,000

50,000

55,000

Provision for employee benefits

19,200

15,700

12,900

Non-Current Liabilities



 

Loans

675,100

175,100

645,000

Provision for employee benefits

21,900

19,400

14,100

Deferred tax liability

6,900

9,700

   -

 

2,698,450

1,478,150

1,238,200

Current Assets



 

Accounts receivable

276,300

104,100

110,800

Allowance for doubtful debts

(15,500)

(7,000)

(4,200)

Dividends receivable

69,250

19,250

 -

Inventory

112,100

144,200

75,900

Non-Current Assets



 

Land and buildings

800,000

610,800

652,000

Plant - at cost

901,200

601,200

699,600

Accumulated depreciation - plant

(294,900)

(194,400)

(297,600)

Deferred tax asset

 -

 -

1,700

Investment in Emu Ltd

650,000

 -

 -

Investment in Koala Ltd

200,000

200,000

-

 

2,698,450

1,478,150

1,238,200

9. Non-controlling interests to be recognised.

10. Platypus Ltd has the following accounting policies which have been in place for the groupfor many years: (i) Revaluation adjustments on acquisition are to be made on consolidation only, not in the books of the subsidiary; (ii) Non-controlling interest is measured at fair value; (iii) Intragroup sales of inventory to be at a markup of 25% on cost; (iv) Plant is depreciated straight-line over its estimated life, with no residual value; and (v) all amounts to be recorded to the nearest whole dollar.

11. The company tax rate is currently 30% and it has been this rate for many years.

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M9746548

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