Corporate Accounting: Consolidation of Lead beaters Ltd and Possum Ltd
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This document provides an acquisition analysis of Possum Ltd, journal entries for the consolidation of Lead beaters Ltd and Possum Ltd, consolidated financial statements, and rationale of the intra-group transactions. It also includes references.
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Running head: CORPORATE ACCOUNTING Corporate Accounting Name of the Student: Name of the University: Author’s Note: Course ID:
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1CORPORATE ACCOUNTING Table of Contents Acquisition analysis ofPossum Ltd:...............................................................................................2 Journal entries for the Consolidation of Lead beaters Ltd and Possum Ltd:...................................3 Journal entries for the worksheet of Lead beaters Ltd and Possum Ltd:.........................................3 Consolidated financial statements of Lead beaters Ltd and Possum Ltd:.......................................4 Providing the rationale of the intra-group transactions:..................................................................4 References:......................................................................................................................................7
3CORPORATE ACCOUNTING Journal entries for the Consolidation of Lead beaters Ltd and Possum Ltd: Journal entries for the worksheet of Lead beaters Ltd and Possum Ltd:
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4CORPORATE ACCOUNTING Consolidated financial statements of Lead beaters Ltd and Possum Ltd: Providing the rationale of the intra-group transactions: Adequate consolidation has been conducted for the inter group transactions, where certain rationale has been used for preparing the final accounts. Thetransactions conducted are related to internal entries, which is not linked with external sources (Nobes 2014). Moreover, retained earnings before tax and inventoryorganizationis evaluated under the intra group transactions for detecting the accurate value of the consolidated statements.Analysis of the intra group transactions are depicted as follows.
5CORPORATE ACCOUNTING Understanding the inventory position of the organisation: The evaluation of the inventory position is relatively considered at cost, where the unrecognized process in added to the inventory value. This has helped in detecting the group inventory values, which is used in the consolidation process. Unearned revenues are directly reduced from the actual inventory that is held by the company for detecting inventory value at the end of the financial year. The intra group inventory value have highlighted the accurate level of inventory that is maintained byLead beaters Ltd after the acquisition (Hoyle, Schaefer and Doupnik 2015). Understanding the deferred tax assets of the organisation: The valuation of the inventory has affected the actual deferred tax of the organization, as we carrying amount of inventory has changed in the consolidated statement. The unearned revenues of the organization have also been omitted in the group transaction, which directly increases the deferred tax Assets of the company. Furthermore, the change in the values of inventory will also alter the values of the deferred tax assets. Hence, the acquisition will nullify the tax on sales of the inventory that was conducted within the group. Thus, this has increased the accurate deferred tax ofLead beaters Ltd after the acquisition process (Gray 2014). Understanding the retained earnings of the organisation: Furthermore, the analysis conducted on the retained earnings of the company involves all the inventory sales that have been conducted within the group. This valuation process has relatively helped in eliminating the process that has generated from the sale, which incurred within the group. Consolidation statement does not incorporate the sale of inventory between the groups and only considers the inventory profits when the actual sale is been conducted outside
6CORPORATE ACCOUNTING the entity. Hence, the entry that is conducted within the group is adjusted with the consolidated statements to detect the accurate level of income from operations. In addition, the retained earning values ofLead beaters Ltd has alerted in the consolidated entries after the acquisition, as sales conducted with Possum Ltd is not considered as actual sales (Gillis, Petty and Suddaby 2014). After the acquisition, the sales that were conducted by both the companies are converting into intra group transactions, where the goods are valued as inventory. Hence, sales value is transferred back to the inventory value of Lead beaters Ltd after the acquisition.
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7CORPORATE ACCOUNTING References: Gillis, P., Petty, R. and Suddaby, R., 2014. The transnational regulation of accounting: insights, gaps and an agenda for future research.Accounting, Auditing & Accountability Journal,27(6), pp.894-902. Gray,S.J.ed.,2014.Internationalaccountingandtransnationaldecisions.Butterworth- Heinemann. Hoyle, J.B., Schaefer, T. and Doupnik, T., 2015.Advanced accounting. McGraw Hill. Nobes, C., 2014. The development of national and transnational regulation on the scope of consolidation.Accounting, auditing & accountability journal,27(6), pp.995-1025.