(solution) Ahmad On 1 July 2010 Parent Ltd purchased 100% of the issued

(solution) Ahmad On 1 July 2010 Parent Ltd purchased 100% of the issued

I need the answers of attached questions in 12 hours time, please

Ahmad
On 1 July 2010 Parent Ltd purchased 100% of the issued capital of Sub Ltd for a purchase price of
$200,000. At that date the shareholders? equity of Sub Ltd disclosed:
Share capital
$100,000
General reserve
$30,000
Retained earnings
$60,000
Goodwill
$30,000
Additional information:
1. At the date of acquisition, all net identifiable assets of Sub Ltd were recorded at fair value,
except that one of the equipment that Sub Ltd owns has a fair value of $90,000. This
equipment was initially acquired for $70,000 and the accumulated depreciation at the date of
acquisition was $50,000. Sub Ltd is using cost model and has not revalued plant and
equipment in its accounting record. Upon the revaluation, the group decides the revalued
equipment has a further useful life of 7 years.
2. On 1 July 2010, Sub Ltd acquired land from Parent Ltd for $40,000 cash. Prior to the transfer,
the land was shown in the accounting records of Parent Ltd at cost, $60,000.
3. Sales by Sub to Parent Ltd were $30,000.
4. Unrealised profit in the opening inventory (1.7.2011) of Sub Ltd for goods sold by Parent Ltd
was $32,000. Unrealised profit in the closing inventory (30.6.2012) of Parent Ltd for goods
sold by Sub Ltd was $65,000
5. On 1 January 2011 Sub Ltd sold an item of plant to Parent Ltd for $14,000. The carrying
amount at the time of sale was $8,000 (cost was $14,000). At the time of the sale the asset
had a remaining useful life of 5 years.
6. Included in the accounts payable of Sub Ltd is $30,000 owing to Parent Ltd.
7. Parent Ltd charges Sub Ltd 10% interest for the $20,000 loan given on 1 July 2011.
8. Company tax rate is 30%
Required:
a) Prepare consolidation journal entries for the year ended 30 June 2012
b) Complete the consolidation worksheet provided below; and
c) Prepare consolidated financial statements. 1 Sales
Less Cost of goods sold
Gross profit
Add: dividends from Sub
Profit from sale of ppe
Interest income
Income subtotal
Selling expenses
Administration expenses
Financial expenses
Less: Total operating expenses
Net Operating income
Less: Income tax expense
Profit for the year
Retained earnings 1.7.11
Less: Interim dividend
Proposed dividend
To General reserve
Retained earnings 30.6.12
Share capital
General reserve
Fair value adjustment
Shareholders' equity
Assets
Land & buildings
Motor vehicles (net)
Plant & equipment (net)
Investment in Sub Ltd
Receivables
Inventory
Cash at bank
Goodwill on consolidation
Deferred tax asset
Total assets
Provision for dividend
Provision for taxation
Payables
Deferred tax liability
Total liabilities
Net assets Parent Ltd
$5,150,000
$2,150,000
$3,000,000
$3,000 Sub Ltd
$4,170,000
$1,900,000
$2,270,000 Adjustme
nts Debit Adjustme
nts Credit Group
data $100,000
$2,000
$3,005,000
$146,000
$406,200
$362,000
$914,200
$2,090,800
$900,000
$1,190,800
$350,000
$55,000
$90,000
$1,395,800
$1,200,000
$160,000 $2,370,000
$228,400
$260,000
$220,000
$708,400
$1,661,600
$560,000
$1,101,600
$60,000
$3,000
$45,000
$10,000
$1,103,600
$100,000
$40,000 $2,755,800 $1,243,600 $820,000
$530,000
$950,000
$200,000
$586,000
$500,000
$300,000 $415,000
$75,000
$400,000 $101,300
$3,987,300
$50,000
$315,500
$820,000
$46,000
$1,231,500
$2,755,800 $300,000
$455,000
$192,000
$30,000
$27,900
$1,894,900
$45,000
$250,000
$320,000
$36,300
$651,300
$1,243,600 2