Determining the Amount of General Reserve

The assignment content appears to be a comprehensive financial statement for an entity, including various components of equity, current and non-current assets, liabilities, and deferred tax assets/liabilities. The values provided are in rupees (Rs.), with totals ranging from Rs. 16,26,100 to Rs. 17,62,100. The content also includes references to relevant accounting standards and publications, such as the Australian Accounting Standards Board (AASB) and the book 'Corporate Accounting in Australia'.

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CONSOLIDATION OF FINANCIAL STATEMENTS

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Table of Contents
1.Solution to Question…………………………………………………………………………. ..3-7
4.References………………………………………………………………………………………..8

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Solution:
Computation of Fair Value of identifiable net assets acquired: (In accordance with
AASB 3)
Share Capital $ 5,00,000
Retained Earnings $ 50,000
General Reserve $ 1,00,000
Fair Value of identifiable net assets acquired $ 6,50,000
Less : Cost of Acquisition $ 7,00,000
Goodwill at acquisition {700000 - 650000} $ 65,000
II Consolidation Journal Entries for the year ending 30 June 2016
Particulars Debit ($) Credit ($)
1. Elimination of Intragroup Sales and Purchases of Inventory
Sales $ 50,000
Cost of Sales $ 50,000
2. Elimination of unrealised profit in Closing Inventory
Sold by Lands Ltd to Peter Ltd
Cost of Sales $ 5,000
Inventory $ 5,000
(Unrealized Profit = $ 25,000 - $ 20,000 = $ 5,000)
3. Elimination of income tax expense on unrealized profit and recognition of deferred tax asset
Sold by Lands Ltd to Peter Ltd
Deferred tax asset $ 1,500
Income tax expense $ 1,500
($5,000 * 30% = $1,500)
4. Elimination of Gain on sale of Plant
Gain on Sale of Plant $ 800
Plant $ 800
5.
Elimination of income tax expense on gain on sale of plant and recognition of deferred tax
asset
Deferred tax asset $ 240
Income tax expense $ 240
($800 * 30% = $240)
6. Elimination of Excess Depreciation on Plant
Accumulated Depreciation $ 214
Depreciation $ 214
($1,500/7 years = $214)
7.
Elimination of income tax expense on excess depreciation expense on plant and recognition
of deferred tax asset

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Income tax expense $ 64
Deferred tax asset $ 64
($214 * 30% = $64)
8. Elimination of Dividend
Other Income $ 30,000
Dividends paid $ 30,000
9. Elimination of Capital and Investment
Share Capital $ 5,00,000
Retained Earnings $ 1,73,000
Goodwill $ 30,910
Deferred tax asset $ 1,676
Accumulated Depreciation $ 214
Inventory $ 5,000
Plant $ 800
Investment in Lands Ltd $ 7,00,000

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Consolidated Statement of Profit and Loss
Peter Ltd and Lands Ltd
(Amount in
$)
Particulars Peter Ltd
(A)
Lands Ltd
(B)
Total (A+B) =
C
Adjustments
Dr
Adjustments
Cr Consolidation
Sales 20,00,000 9,28,000 29,28,000 50,000 - 28,78,000
Less
: Cost of Sales -7,00,000 -6,70,000 -13,70,000 - 50,00
0 -13,20,000
Wages and Salaries -61,000 -32,000 -93,000 - - -93,000
Depreciation -5,100 -4,800 -9,900 - 21
4 -9,686
Other Expenses -5,500 - -5,500 - - -5,500
Impairment of Goodwill - - - 7,000 - -7,000
Total Expense -7,71,600 -7,06,800 -14,78,400 7,000 50,21
4 -14,35,186
Gross Profit 12,28,400 2,21,200 14,49,600 57,000 50,21
4 14,42,814
Profit from Sale of Plant 800 - 800 800 - -
Other Income 30,000 - 30,000 30,000 - -
Legal Fees -3,500 - -3,500 - - -3,500
Profit before income tax 12,55,700 2,21,200 14,76,900 87,800 50,21
4 14,39,314
Income tax expense -3,67,710 -88,480 -4,56,190 64 1,740 -4,54,514
Operating profit after tax
8,87,99
0 1,32,720
10,20,71
0
87,86
4
51,95
4
9,84,80
0

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Retained earnings 1 July 2015 70,820 70,280 1,41,100 -1,73,000 - -31,900
Available for appropriation 9,58,810 2,03,000 11,61,810 -85,136 51,954 9,52,900
Dividends paid -1,23,710 -30,000 -1,53,710 30,000 - -1,23,710
Retained earnings 30 June
2016 8,35,100 1,73,000 10,08,100 -55,136 51,954 8,29,190
Consolidated Financial Statement:
Particulars Peter Ltd
(A)
Lands Ltd
(B)
Total (A+B) =
C
Adjustments
Dr
Adjustments
Cr Consolidation
Equity
Retained Earnings 8,35,100 1,73,000 10,08,100 1,80,000 - 8,28,100
Share Capital 6,00,000 5,00,000 11,00,000 5,00,000 - 6,00,000
General Reserve 1,20,000 1,00,000 2,20,000 - - 2,20,000
Other Components of equity 10,000 10,000 20,000 - - 20,000
Available for-sale fin assets 1,000 3,000 4,000 - - 4,000
Current Liabilities
Deferred Tax Liability 60,000 30,000 90,000 - - 90,00
0
16,26,100 8,16,000 24,42,100 6,80,000 - 17,62,10
0
Current assets
Cash 2,00,000 2,77,000 4,77,000 - - 4,77,00
0
36,00 4,06,0 5,00 4,01,00

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Inventory 3,70,000 0 00 - 0 0
Other Current Assets 15,100 3,00,000 3,15,100 - - 3,15,100
Available for-sale fin assets 41,000 68,000 1,09,000 - - 1,09,000
Non-current assets
Land 2,30,000 1,20,000 3,50,000 - - 3,50,000
Plant & Equipment 1,00,000 28,000 1,28,000 - 800 1,27,200
Less: Accumulated Depreciation &
Impairment Losses -30,000 -13,000 -43,000 214 - -42,786
Goodwill - - - 30,910 - 30,910
Goodwill : Accumulated
Impairment Losses - - - - 7,000 -7,000
Deferred Tax Asset - - - 1,676 - 1,676
Shares in Lands Ltd 7,00,000 - 7,00,000 - 7,00,000 -
16,26,100 8,16,000 24,42,100 32,800 7,12,800 17,62,100

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References:
Consolidated Financial Statements. (2011). http://www.aasb.gov.au. Retrieved 4 September 2016, from
http://www.aasb.gov.au/admin/file/content105/c9/AASB10_08-11.pdf
Ron Dagwell, R., Wines, G., & Lambert, C. (2011). Corporate Accounting in Australia. Google Books.
Retrieved 4 September 2016, from https://books.google.co.in/books?
id=qCziBAAAQBAJ&pg=PA357&lpg=PA357&dq=consolidation+journal+entries+for+goodwill+in+australia&s
ource=bl&ots=0_9R0p0Ahy&sig=qbRxOKpc45cVGIkdHPa8ewoAi8&hl=en&sa=X&ved=0ahUKEwjR3PylwvP
OAhWHRI8KHS6XB5wQ6AEIHDAA#v=onepage&q=consolidation%20journal%20entries%20for%20goodwill
%20in%20australia&f=false
Income Taxes. (2012). http://www.aasb.gov.au. Retrieved 4 September 2016, from
http://www.aasb.gov.au/admin/file/content105/c9/AASB112_07-04_COMPsep11_07-12.pdf