Consolidated Financial Statements Analysis

This assignment requires students to analyze the provided consolidated financial statements of Green Bay Ltd., covering the period ending June 30, 2017. The analysis should focus on understanding the company's financial position and performance based on the presented balance sheet and statement of financial position. Key areas to consider include assets, liabilities, equity, and profitability.

Solution-1
(a) Calculation of taxable income for the year ended 30 June, 2017
Particulars Amount ($)
Profit before tax 3,500,000
Add:
Goodwill impaired 200,000
Depreciation as per accounting (refer WN-1) 160,000
Provision for long service leave 105,000
Provision for doubtful debts 45,000
Provision for warranty expense 50,000
Entertainment expense 75,000
R&D expense (120,000/5/2) 12,000 647,000
Less:
Depreciation as per Tax (refer WN-1) 200,000
Long service leave paid 90,000
Actual bad debts written off 65,000
Warranty expense paid 45,000
R&D expense paid 150,000 550,000
Taxable income 3,597,000
Tax @ 30% 1,079,100
WN-1 Calculation of depreciation
Plant & Equipment Accounting Tax
Cost of purchase 800,000 800,000
Rate of Dep 20% 25%
Date of purchase 01-Jul-15 01-Jul-15
Dep for the FY 2015-16 160,000 200,000
Carrying value 30 June, 2016 640,000 600,000
Dep for the FY 2016-17 160,000 200,000
Carrying value 30 June, 2017 480,000 400,000

Taxation worksheet for Green Bay Ltd for the year ended 30 June 2017
Item
Statement of
financial
position ($)
Tax
bases ($)
Deductible
temporary
differences ($)
Taxable
temporary
differences
($)
Tax
expense
($)
Current
tax
payable
($)
ASSETS
Cash 250,000 250,000 -
Inventory 350,000 350,000 -
Accounts receivable (net)
(refer WN-2) 740,000 770,000 30,000 (9,000)
Plant and equipment (net) 480,000 400,000 80,000 24,000
Research and development
cost 108,000 - 108,000 32,400
Goodwill 600,000 - 600,000 180,000
2,528,000
LIABILITIES
Payables 780,000 780,000 - - -
Provision for long service
leave 115,000 - 115,000 - (34,500)
Provision for warranty
expense 80,000 - 80,000 - (24,000)
Loan 1,100,000 1,100,000 - - -
2,075,000
NET ASSETS 453,000
Temporary difference at the end of the period 225,000 788,000
Less: Prior period balance (49,500) -
Movement for the period - -
Tax effect at 30% 67,500 236,400
Tax taxable income @ 30% 1,079,100
Income tax adjustments 18,000 236,400

WN-2: Calculation of balance in Accounts Receivable in tax books as on 30 June, 2017
In Accounting Books
Accounts Receivable
Particulars Amount ($) Particulars Amount ($)
Opening balance 320,000 Bad debts w/o 65,000
sales 485,000 Closing balance 740,000
805,000 805,000
Allowance for doubtful debts
Particulars Amount ($) Particulars Amount ($)
Bad debts w/o 65,000 Opening balance 30,000
Closing balance 10,000 Provision created 45,000
75,000 75,000
In Tax Books
Accounts Receivable
Particulars Amount ($) Particulars Amount ($)
Opening balance 350,000 Bad debts w/o 65,000
Sales 485,000 Closing balance 770,000
835,000 835,000
(b) Journal Entry required by AASB 112 Income Taxes for the year ended 30 June 2017
Date Account Titles Debit Credit
30 June, 2017 Income Tax expense 1,079,100
To Income tax payable 1,079,100
(To record current tax liability)
30 June, 2017 Deferred tax expense 236,400
To Deferred tax liability 236,400
(To record deferred tax liability)
30 June, 2017 Deferred tax asset 18,000
To Deferred tax expense 18,000
(To record deferred tax asset)

(c) Journal Entries to reflect this change of tax rate on 1 July 2017
If the tax rate changes from 30% to 25% then the balances of deferred tax asset and liabilities will change
to the extent of change in the rate of tax. In that case, the entries will be:
Date Account Titles Debit Credit
30 June, 2017 Deferred tax liability (788,000*5%) 39,400
To Deferred tax expense 39,400
(To record change in rate of tax by 5%)
30 June, 2017 Deferred tax expense ((225,000*25%)-49,500) 6,750
To Deferred tax asset 6,750
(To record change in rate of tax by 5%)

Solution-2
Calculation of Acquisition analysis
Fair Value of net assets acquired as on 1 July, 2012
Share Capital 6,000,000.00
General Reserve 3,000,000.00
Retained Earnings 3,000,000.00
Fair value:
- Non-current assets (800000*(1-30%)) 560,000.00
Fair value of net assets 12,560,000.00
Non-controlling interest @ 20% - (a) 2,512,000.00
Consideration transferred - (b) 12,000,000.00
Aggregate of (a) and (b) 14,512,000.00
Goodwill 1,952,000.00
Part-1: Consolidation Worksheet Entries
Sr. No. Particulars Debit Credit
Business Combination Valuation Entries
(i) Non-current assets 800,000.00
To Deferred tax liability 240,000.00
To Business Combination Valuation Reserve 560,000.00
(ii) Depreciation expense (800,000/10) 80,000.00
Retained earnings (1/7/12) ((800,000/10*4) 320,000.00
To Accumulated Depreciation 400,000.00
(iii) Deferred tax liability 120,000.00
To Income tax expense 24,000.00
To Retained earnings (1/7/12) 96,000.00
(iv) Retained earnings (1/7/12) 550,000.00
To Accumulated Impairment Loss - Goodwill 550,000.00
2. Pre-Acquisition entry as on 1 July, 2012
(v) Share Capital 4,800,000.00

General Reserve 2,400,000.00
Retained Earnings 2,400,000.00
Goodwill 1,952,000.00
Business combination valuation reserve 448,000.00
To Investment in Blue Sky Ltd. 12,000,000.00
3. NCI share of equity Entry as on 1 July, 2012
(vi) Share Capital 1,200,000.00
General Reserve 600,000.00
Retained Earnings 600,000.00
Business combination valuation reserve 112,000.00
To Non-controlling interest 2,512,000.00
4. Other consolidation entries as on 30 June, 2017
Elimination of interim & Final dividend paid
(vii) Dividend Income 640,000.00
To Interim Dividend Paid (800,000*80%) 640,000.00
(viii) NCI 160,000.00
To Interim Dividend Paid (800,000*20%) 160,000.00
(ix) Dividend Income 960,000.00
To Proposed Final Dividend (1200,000*80%) 960,000.00
(x) NCI 240,000.00
To Proposed Final Dividend (1200,000*20%) 240,000.00
Profit in opening inventory
(xi) Retained earnings 513,800.00
Income tax expense 220,200.00
To Cost of Sales 734,000.00
Sales of inventory - current period
(xii) Sales 25,000,000.00
To Cost of Sales 24,319,500.00
To Inventory 680,500.00
(xiii) Deferred tax asset 204,150.00
To Income tax expense 204,150.00
Sale of Inventory classified as Machinery : prior
period

(xiv) Retained earnings 525,000.00
Deferred tax asset 225,000.00
To Plant (1,950,000 - 1,500,000 -
1,500,000*10%*2) 750,000.00
(xv) Accumulated depreciation 281,250.00
To Depreciation expense (750,000/8*1) 93,750.00
To Retained earnings (750,000/8*2) 187,500.00
(xvi) Income tax expense 28,125.00
Retained earnings 56,250.00
To Deferred tax asset 84,375.00
Elimination of Loan and its interest
(xvii) Liabilities 2,500,000.00
To Investments 2,500,000.00
(xviii) Interest income on loan 187,500.00
To Interest expenses 187,500.00
Impairment of Goodwill
(xix) Impairment Loss 600,000.00
To Accumulated Impairment Loss - Goodwill 600,000.00

Part-2: Consolidation Worksheet
Particulars Green Bay
Ltd
Blue Sky
Ltd Total Adjustments Total
Income Statement $ $ Ref. Dr Cr Ref.
Sales 125,000,
000
75,000,0
00
200,000,00
0 (xii) 25,000,0
00
175,000,00
0
Cost of goods sold (80,000,0
00)
(69,000,0
00)
(149,000,000
)
25,053,50
0
(xi),
(xii)
(123,946,500
)
Gross Profits 45,000,
000
6,000,0
00 51,000,000 51,053,500
Other income 5,000,0
00
3,000,0
00 8,000,000
(vii),
(ix),
(xviii)
1,787,5
00 6,212,500
Operating expenses (4,000,0
00)
(2,600,0
00)
(6,600,000
)
(ii),
(xix)
680,00
0
281,25
0
(xv),
(xviii
)
(6,998,750
)
Operating profit
before income tax
expense
46,000,
000
6,400,0
00 52,400,000 50,267,250
Income tax expense (13,800,0
00)
(1,920,0
00)
(15,720,000
)
(xi),
(xvi)
248,32
5
228,15
0
(iii),
(xiii)
(15,740,175
)
Operating profit
after income tax
expense
32,200,
000
4,480,0
00 36,680,000 34,527,075
Retained profit
(1/7/16)
12,000,
000
6,200,0
00 18,200,000
(ii),
(iv),
(v),
(vi),
(xi),
(xiv),
(xvi)
4,965,0
50
283,50
0
(iii),
(xv) 13,518,450
Interim dividend
paid (1/1/17)
(8,200,0
00)
(800,0
00)
(9,000,000
)
800,00
0
(vii),
(viii)
(8,200,000
)
Proposed Final
dividend
(4,800,0
00)
(1,200,0
00)
(6,000,000
)
1,200,00
0
(ix),
(x)
(4,800,000
)
Retained profit
(30/6/17)
31,200,
000
8,680,0
00 39,880,000 35,045,525
Balance Sheet
Current Assets 18,274,
000
4,678,0
00 22,952,000 680,50
0 (xii) 22,271,500
Non-Current Assets 55,443,
000
16,449,0
00 71,892,000 (i),
(xv)
1,081,2
50
1,150,00
0
(ii),
(xiv) 71,823,250
Investments 16,353,
000
5,113,0
00 21,466,000 14,500,00
0
(v),
(xvii) 6,966,000
Deferred tax assets (xiii),
(xiv)
429,15
0
84,37
5 (xiv) 344,775
Goodwill (v) 1,952,0
00 1,952,000

Accumulated
Impairment Loss -
Goodwill
1,150,00
0
(iv),
(xix)
(1,150,000
)
Total assets 90,070,000 26,240,000 116,310,000 102,207,525
Share Capital 35,000,000 6,000,000 41,000,000 (v)
(vi) 6,000,000 35,000,000
General reserve 7,500,000 3,200,000 10,700,000 (v)
(vi) 3,000,000 7,700,000
Revaluation
Surplus 870,000 560,000 1,430,000 1,430,000
Retained profit 31,200,000 8,680,000 39,880,000 35,045,525
Deferred tax
liability (iii) 120,000 240,000 (i) 120,000
Business
Combination
Valuation Reserve
(v),
(vi) 560,000 560,000 (i) -
Non-controlling
interest
(viii),
(x) 400,000 2,512,000 (vi) 2,112,000
Liabilities 15,500,000 7,800,000 23,300,000 (xvii) 2,500,000 20,800,000
Total Liabilities &
Equity 90,070,000 26,240,000 116,310,000
48,723,27
5 48,723,275 102,207,525
- - - -

Part-3: Consolidated Financial Statements
CONSOLIDATED INCOME STATEMENT
Green Bay Ltd.
Consolidated Statement of Profit or loss and other comprehensive income for
the period ended on 30 June, 2017
Particulars Amount
Sales revenue 175,000,000
Other income 6,212,500
Total Income 181,212,500
Cost of Sales 123,946,500
Other expenses 6,998,750
Total expenses 130,945,250
Profit before tax 50,267,250
Income tax expense 15,740,175
Profit for the period 34,527,075
Profit for the period 34,527,075
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Green Bay Ltd.
Consolidated Statement of Changes in Equity
For the year ended on 30 June, 2017
Particulars Share
Capital
Retained
Earnings
General
Reserve
Balance as at 1 July, 2016 35,000,000 13,518,450 7,700,000
Profit for the year 34,527,075
Proposed Final dividend (4,800,000)
Interim Dividend Paid (8,200,000)
Balance as at June 30, 2017 35,000,000 35,045,525 7,700,000

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Green Bay Ltd.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended on 30 June, 2017
(Amount in $)
Particulars As at
30 June, 2017
Current Assets 22,271,500
Non-Current Assets 71,823,250
Investments 6,966,000
Goodwill 1,952,000
Accumulated Impairment Loss - Goodwill (1,150,000) 802,000
Deferred tax assets 344,775
Total assets - (a) 102,207,525
Liabilities & Equity
Liabilities 20,800,000
Share Capital 35,000,000
General reserve 7,700,000
Revaluation Surplus 1,430,000
Retained profit 35,045,525
Deferred tax liability 120,000
Non-controlling interest 2,112,000
Total liabilities & equity 102,207,525
-