I need the answers of attached questions in 12 hours time, please
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:
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%
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
Add: dividends from Sub
Profit from sale of ppe
Less: Total operating expenses
Net Operating income
Less: Income tax expense
Profit for the year
Retained earnings 1.7.11
Less: Interim dividend
To General reserve
Retained earnings 30.6.12
Fair value adjustment
Land & buildings
Motor vehicles (net)
Plant & equipment (net)
Investment in Sub Ltd
Cash at bank
Goodwill on consolidation
Deferred tax asset
Provision for dividend
Provision for taxation
Deferred tax liability
Net assets Parent Ltd
$3,000 Sub Ltd
nts Debit Adjustme
nts Credit Group
$40,000 $2,755,800 $1,243,600 $820,000
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