2103AFE Company Accounting 1 2103AFE Company Accounting Group Assignment T1 2018 This assignment requires students to prepare the consolidated financial statements in accordance with AASB 10...

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Only need to complete part d - consolidation worksheet basing on given information.


2103AFE Company Accounting 1 2103AFE Company Accounting Group Assignment T1 2018 This assignment requires students to prepare the consolidated financial statements in accordance with AASB 10 Consolidated Financial Statements. DUE DATES: Assignment: 18 May, 2018 SPARK ratings: 25 May, 2018 TOTAL WEIGHTING: 20% This piece of assessment task will consist of Part A- Group work (10%) and Part B- Self & Peer assessment (10%). Part A (10%). The aim of Part A is to apply the knowledge and understanding of Consolidation from lectures and workshops in a practical and detailed manner. The assignment is to be completed in groups of three or four. Students will sign up in a group on Learning@Griffith from Week 4. Part B (10%). This assignment involves the completion of Self and Peer Assessment Ratings and feedbacks using SPARKplus. All information pertaining to SPARKplus is located in the Learning@Griffith course site under Assessment>>SPARKplus Student Resources. Please see the attached rubric for Part B that shows you how the ratings will be assessed. Students who do not rate to their peers (group members) or provide feedback to their peers, will receive 0% in the assessment. REQUIREMENTS: 1. Students are required to complete Assignment in a group. 2. All answers must use proper English, expression and grammar. The assignment must be word-processed using Microsoft Word or Excel, Times New Roman, 12 point font. 3. Students must complete the Self & Peer Assessment Resource Kit (SPARK) Ratings of themselves and each of the group members [see Part B above for details]. Final ratings must be completed by the due date shown above. 4. The assignment is to be submitted on-line by the due date. SUBMISSION: 1. Detailed instructions on how to submit the assignment is available in the Course Home Tab/Assignment Submission on Learning@Griffith. 2. Only one group assignment is to be submitted by the group (only one member submits the assignment on behalf of the group). 3. The assignment should be submitted on-line through the assignment submission tab available on Learning@Griffith and only one assignment is to be submitted per group and each group member must complete the electronic assignment cover sheet. Please refer to Learning@Griffith for further details. 4. Each group member must complete an Academic Integrity Declaration. 2 Assignment (50 marks in total) Consolidation Case Study: Sky Ltd and River Ltd Sky Ltd acquired 80% of the share capital of River Ltd on 1 July 2012. The following equity balances appeared in the records of River Ltd at the date of acquisition: Share capital (210,000 shares) $210,000 General reserve 6,100 Retained earnings 75,000 Financial information at 30 June 2017 of Sky Ltd and its subsidiary company, River Ltd, is shown below. Sky Ltd River Ltd $ $ Sales revenue 708,000 492,000 Cost of sales (273,000) (178,500) Gross Profit 435,000 313,500 Other revenue: Debenture interest — 10,500 Management fees 10,500 — Dividend from River Ltd 16,800 — 462,300 324,000 Administrative expenses (31,500) (16,800) Distribution expenses (189,000) (126,000) Depreciation on machinery (31,500) (31,500) Finance expenses (27,600) (12,000) Other expenses (29,400) (25,200) Total operating expenses (309,000) (211,500) Profit before tax 153,300 112,500 Income tax expense (52,500) (34,500) Profit after tax 100,800 78,000 Retained earnings (1/7/2016) 105,000 94,500 205,800 172,500 Transfer to general reserve (6,300) — Interim dividend paid (31,500) (21,000) Final dividend declared (37,800) (42,000) (75,600) (63,000) Retained earnings (30/6/2017) 130,200 109,500 General reserve 105,000 36,000 Other components of equity (1/7/2016) 27,300 21,000 Share capital 630,000 210,000 Liabilities: 3 Debentures 255,000 60,000 Deferred tax liability — 14,700 Current tax liability 52,500 35,700 Dividend payable 37,800 42,000 Other current liabilities 189,000 25,200 1,426,800 554,100 Cash and cash equivalents 107,100 6,000 Trade receivables 68,250 40,200 Inventory 189,000 58,500 Debentures in Sky Ltd 105,000 Shares in River Ltd 270,000 — Machinery (cost) 252,000 214,200 Accumulated depreciation – machinery (136,500) (115,500) Other depreciable assets 159,600 115,500 Accumulated depreciation (84,000) (52,500) Deferred tax asset 179,250 63,000 Land 422,100 119,700 1,426,800 554,100 Additional information i. At 1 July 2012, all the identifiable assets and liabilities of River Ltd were recorded at fair value except for the following assets: Carrying amount Fair value Land $61,500 $79,500 Machinery (cost 135,000) 105,000 120,000 Receivable 40,000 34,000 The machinery has an expected life of 10 years, with benefits being received evenly over that period. Differences between carrying amounts and fair values are adjusted on consolidation. The land on hand at 1 July 2012 was sold on 1 March 2014 for $84,000. Any valuation reserve in relation to the land is transferred on consolidation to retained earnings. By 30 June 2013, receivables had all been collected. ii. Sky Ltd uses the full goodwill method. The fair value of the non-controlling interest at 1 July 2012 was $66,000. iii. Opening inventory of River Ltd includes unrealised profit of $4,800 on inventory sold by Sky Ltd. It was all sold by River Ltd during the year. iv. During the year, intragroup sales by River Ltd to Sky Ltd were $80,000. The mark-up on cost of all sales was 25%. At 30 June 2017, Sky Ltd’s inventory included $35,000 of items acquired from River Ltd. v. On 1 January 2017, River Ltd sold an item of inventory to Sky Ltd for $18,000 at a profit before tax of $3000. Sky Ltd had treated this item as an addition to its machinery and depreciated at 10% p.a. straight-line. 4 vi. On 1 April 2017, Sky Ltd sold $15,000 worth of inventory to River Ltd. The cost of this inventory was $9000. By 30 June 2017, River Ltd had sold 60% of the inventory to outside entities. vii. Some of the items manufactured by River Ltd are used as machinery by Sky Ltd. One of the machinery items held by Sky Ltd at 30 June 2017 was purchased from River Ltd on 1 January 2016. It had cost River Ltd $17,500 to manufacture this item and was sold to Sky Ltd for $25,000. Sky Ltd depreciates such items at 10% p.a. on cost. viii. Management fees derived by Sky Ltd were all from River Ltd and represented charges made for administration. ix. The tax rate is 30%. Required: a) Prepare the acquisition analysis at 1 July 2012. (6 marks) b) Prepare the consolidation journal entries, including: - The business combination valuation entries; (6 marks) - The pre-acquisition entries; (5 marks) - The intra-group entries; (15 marks) c) Calculate NCI share of equity at following dates and prepare the journal entries: - 1 July 2012; (3 marks) - 1 July 2012 – 30 June 2016; (4 marks) - 1 July 2016 – 30 June 2017. (3 marks) d) Prepare the consolidation worksheet as at 30 June 2017. (8 marks) Note: Please show all workings. Consolidated journals, worksheet and all calculation should be presented in the same format as used in Leo, et al., 11ed (2018) textbook. 5 2103AFE Company Accounting 2103AFE Company Accounting Group Assignment T1 2018 Solutions: A. Acquisition analysis at 1st July 2012. At 1st July 2012: Net Fair Value of identifiable assets, liabilities and contingent liabilities of River Ltd (80%) NFVINA Share Capital$210,000 General Reserve$6,100 Retained Earnings$75,000 Total$291,100 Land ($79,500-$61,500) x (1-30%) = $12,600 Machinery ($120,000-$105,000) x (1- 30%) = $10,500 Receivable ($34,000 - $40,000) x (1 – 30%) = -$4,200 Total Fair Value Adjustments$18,900 Total NFVINA$310,000 i. Consideration Transferred $270,000 ii. NCI in Subsidiary$66,000 Aggregate of (i) & (ii)$336,000 Total Goodwill on acquisition $336,000 - $310,000 = $26,000 Goodwill of River Ltd FV of River Ltd $66,000.00/20%=$330,000 NFVINA of River Ltd$310,000 Goodwill of River Ltd$20,000 Goodwill of Sky Ltd Total Goodwill Acquired$26,000 Goodwill of River Ltd$20,000 Goodwill of Sky Ltd – Control Premium$6,000 B. Prepare the consolidation journal entries, including: 1. The Business combination valuation entries: Description DR CR Accumulated Depreciation – Machinery (135,000 – 105,000) $30,000 Machinery (135,000 – 120,000) $15,000 Differed Tax Liability ($120,000 – $105,000) x 30% $4,500 BCVR $10,500 Depreciation expense ($15,000/10years) $1,500 Retained Earnings $12,000 Accumulated Depreciation – Machinery $13,500 Deferred Tax Liability (13,500 x 30%) $4,050 Income Tax Expense ($1,500 x 30%) $450 Retained Earnings $3,600 Goodwill $20,000 BCVR $20,000 Land $18,000
Answered Same DayMay 10, 20202103AFEGriffith University

Answer To: 2103AFE Company Accounting 1 2103AFE Company Accounting Group Assignment T1 2018 This assignment...

Ashish answered on May 14 2020
144 Votes
Sheet2
        Financial Statements    Sky Ltd    River Ltd    Adjustments                Group    NCI                    Parent
                        Dr    Cr                Dr    Cr
        Sales revenue    708,000    492,000    iv    80,000            1,087,000
                    v    18,000
                    vi    15000
        Cost of sales (COGS)    -273,000    -178,500            5,000    iii    -345,900
                            73,000    iv
                            15,000    v
                            12,600    vi
        Gross Profit    435,000    313,500                    741,100
        Debenture interest    0    10,500    viii    10,500            0
        Management fees    10,500    0    viii    10,500            0
        Dividend from River Ltd    16,800    0    viii    16,800            -33,600
                    viii    33,600
        Total revenues    462,300    324,000                    707,500
        Administrative expenses    31,500    16,800            10,500    viii    37,800
        Distribution expenses    189,000    126,000                    315,000
        Depreciation on    31,500    31,500    B    1,500    150    v    63,600
        machinery                    750    vii
        Finance expenses    27,600    12,000            10,500    viii    29,100
        Other expenses    29,400    25,200                    54,600
        Total expenses    309,000    211,500                    500,100
        Profit    153,300    112,500                    207,400
        Gain or loss on sale    0    0                    0
        Profit before tax    153,300    112,500                    207,400
        Income    52,500    34,500    iii    1,500    2,100    iv    84,600
        Tax...
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