Advanced Accounting
Sheet1 itemAspectEventData 1Acquisiton of Subsidiary by ParentAcquisiton date of Subsidiary by the Parent1/07/2018 2% ownership of Parent in Subsidiary80 3Subsidiary Share Capital at acquisition date$1,500,000 4Subsidiary Retained Earnings at acquisition date$300,500 5Fair value adjustment at acquisition dateAt acquisiton date, the fair value of Plant Touch-U in Subsidiary is $1,600.00 6Cost of Plant Touch-U is$1,300.00 7At acquisition date, accumulated Depreciation of Plant Touch-U$900 8At acquision date, the remaining useful life in years of Plant Touch U4 9Intra-group service transactionSubsidiary pays management fees to Parent during the financial year. This item is included in 'other' income and expenses5500 10Intra-group inventory transaction: Parent sell inventory (Type-High) to subsidiary in current periodDuring the current financial year Parent Ltd sold inventory to Subsidiary Ltd at a price of $26,000 11The inventory cost Parent to produce$18,000 12% of this inventory is still on hand with Subsidiary Ltd at the end of the financial year. 40 13Intra-group inventory transaction: Subsidiary sell inventory (Type-Low) to Parent in current periodDuring the current financial year Subsidiary Ltd sold inventory to Parent Ltd at a price of 22000 14The inventory cost Subsidiary to produce$16,000 15% of this inventory is still on hand with Parent Ltd at the end of the financial year. 30 16Intra-group inventory transaction: Subsidiary sell inventory (Type Rich) to Parent in previous period brought into the current periodDuring the current financial year Subsidiary Ltd sold inventory to Parent Ltd at a price of $13,000 17The inventory cost Subsidiary to produce$10,000 18% of this inventory is still on hand with Parent Ltd at beginning of the financial year40 19Goodwill impairmentParent Ltd Management believes goodwill has impaired in the previous years by $18,000 20Parent Ltd Management believes goodwill has further impaired in the current period years by $8,000 21Intra-group depreciable non-current asset (Plant-Steel-Ball) transaction: Subsidiary sell non current asset to Parent in current periodBeginnig of the current year, Subsidiary Ltd sold an item of plant-hard to Parent Ltd for a price of$46,000 22Cost of the plant-hard at the time of intra-group transaction is$51,000 23Accumulated depreciation of the plant-hard at the time of intra-group transaction is$26,000 24Remaining useful life of the plant-hard at the time of sale with no expected residual value, in years10 25Intra-group depreciable non-current asset (Plant-Aluminium-Spade) transaction: Parent sell non current asset to Subsidiary in previous periodBeginnig of the previous year, Parent Ltd sold an item of plant-happy to Subsidiary Ltd for a price of47600 26Cost of that item of plant-happy at the time of intra-group transaction is$52,600 27Accumulated depreciation of the plant-happy at the time of intra-group transaction is$27,600 28Remaining useful life of the plant-happy at the time of sale with no expected residual value, in years5 29 Income tax rate as % is 30 30NoteThe management of Parent Ltd values any non-controlling interest in Subsidiary Ltd at fair value Sheet2 Detailed reconciliation of opening and closing retained earningsParent LtdSubsidiary LtdConsolidation adjustmentsConsolidated entity Ref NoDrDrDrDrDrDrDrDrRef NoCrCrCrCrCrCrCrCr Sales revenue$480,000$115,000$595,000 Cost of goods sold-$100,000-$40,000-$140,000 Other expenses-$80,000-$15,000-$95,000.00 Goodwill impairment expense Other revenue$70,000$25,000$95,000 Gain on bargain purchase Profit before tax$370,000$85,000$455,000 Tax expense-$60,000-$30,000-$90,000.00 Profit for the year$310,000$55,000$365,000 Retained earnings—beginning of year$1,000,000$800,000$1,800,000.00 Retained earnings available for distribution$1,310,000$855,000$2,165,000 Dividends paid-$160,000-$30,000-$190,000 Dividend declared-$40,000-$10,000-$50,000 Retained earnings—30 June 2X20$1,110,000$815,000$1,925,000 Statement of financial positionParent LtdSubsidiary LtdConsolidation adjustmentsConsoiidated entity Shareholders’ equityRef NoDrDrDrDrDrDrDrDrRef NoCrCrCrCrCrCrCrCrShareholders’ equity Revaluation and other reserves0 Retained earnings$1,110,000$815,000$1,925,000 Share capital$4,000,000$1,500,000$5,500,000 Current liabilitiesCurrent liabilities Accounts payable$20,000$30,000$50,000 Dividends payable$40,000$10,000$50,000 Deferred tax liability0 Non-current liabilitiesNon-current liabilities Loans$600,000$250,000$850,000 Deferred tax liability0 Total of liabilities and equity$5,770,000$2,605,000$8,375,000.00 Current assetsCurrent assets Cash$150,000$25,000$175,000 Accounts receivable$242,000$175,000$417,000 Dividends receivable$8,000$0$8,000 Inventory$500,000$300,000$800,000 Deferred tax asset0 Non-current assetsNon-current assets Land$1,400,000$1,105,000$2,505,000 Plant$1,870,000$1,300,000$3,170,000 Accumulated depreciation-$400,000-$300,000-$700,000 Deferred tax asset0 Goodwill on acquistion0 Accumulated goodwill impairment Investment in Subsidiary Ltd$2,000,000$0$2,000,000 Total assets$5,770,000$2,605,000$8,375,000 Statement of Changes in Equity DescriptionShare capital $Retained earnings $Reserves $Group $ Balance at 1 July 2019 Total comprehensive income for the year Dividends Balance at 30 June 2020 Ref NoDr/CrConsolidation journal account name 1 Consolidation journal entries for the fair value adjustment of the Plant-Touch U in Subsidiary Ltd and the resulted tax effect Debit $Credit $ ·· 2Consolidation journal entries relating to pre-tax depreciation entry resulting because of fair value adjustment of the Plant-Touch-U asset Debit $Credit $ 3Consolidation journal entries relating to tax effect result from the depreciation entry resulting because of fair value adjustment of the Plant-Touch-U to prepare group accounts for the current yearDebit $Credit $ 4 Consolidation journal entries for the elimination of Parent Ltd’s investment in Subsidiary LtdDebit $Credit $ 5Consolidation journal entries relating to the management fees for the current yearDebit $Credit $ 6Consolidation journal entries relating intra-group inventory-Type High transactions and its tax effectsDebit $Credit $ 7Consolidation journal entries relating intra-group inventory-Type Low transactions and its tax effectsDebit $Credit $ 8Consolidation journal entries relating intra-group inventory (coming from the previous period)-Type Rich transactions and its tax effectsDebit $Credit $ 9Consolidation journal entries relating to impairment of goodwill.Debit $Credit $ 10Consolidation journal entries relating intra-group plant-Steel-Ball transactions and its tax effectsDebit $Credit $ 11Consolidation journal entries relating intra-group Plant-Aluminium-Spade transactions and its tax effectsDebit $Credit $ 12Consolidation journal entries relating to intra-group dividends.Debit $Credit $ 13Itemise and show the non-controlling interests in Subsidiary Ltd on acquisition date Credit $ Share capital Retained earnings Revaluation surplus Goodwill Total0.00 14ERROR:#NAME? Itemise and show the non-controlling interest movements in share capital and reserves between the acquisition date and beginning of the current financial yearCredit $ Increase in retained earnings from acquisition date to beginning of year Additional depreciation expense due to revaluation of Plant Touch-U Additional income tax expense due to previous period depreciation expense from revaluation of Plant Touch-U Previous period intra-group cost of sale of Type-Rich inventory Previous period intra-group cost of sale of Type-Rich inventory - income tax Impairment expense of goodwill in previous period Previous period intra-group gain on sale of Plant Aluminum-Spade Previous period intra-group gain on sale of Plant Aluminum-Spade - income tax Additional depreciation expense due to previous period intra-group sale of Plant Aluminum-Spade Additional income tax expense due to previous period depreciation expense from intra-group sale of Plant Aluminum-Spade Total0.00 15Itemise and show the non-controlling interests of the Parent Ltd Group for the current financial yearCredit $ Profit after tax for the year Depreciation expense from revaluation of Plant Touch-U Income tax expense from depreciation expense of revaluation of Plant Touch-U Intra-group cost of sale of Type-Low inventory Intra-group cost of sale of Type-Low inventory - income tax Intra-group cost of sale of Type-Rich inventory Intra-group cost of sale of Type-Rich inventory - income tax Impairment expense of goodwill Intra-group gain on sale of Plant Steel-Ball Intra-group gain on sale of Plant Steel-Ball - income tax Depreciation expense from intra-group sale of Plant Steel-Ball Income tax expense from depreciation expense of intra-group sale of Plant Steel-Ball Depreciation expense from intra-group sale of Plant Aluminum-Spade Income tax expense from depreciation expense of intra-group sale of Plant Aluminum-Spade Total0.00 16Comppute the total non-controlling interest (NCICredit $ NCI at acquisition NCI from acquisition to beginning of year NCI during the year Interim dividend Final dividend Total NCI in the group0.00