Financial Statement Analysis Example

This assignment presents a detailed analysis of a company's financial statements. It includes calculations of various key financial ratios, such as liquidity, profitability, and solvency ratios. The analysis highlights trends in the company's performance over time and offers insights into its financial health. The document is suitable for accounting students studying financial statement analysis.

Running head: CONSOLIDATION
Consolidation
Name of the Student:
Name of the University:
Authors Note:

1CONSOLIDATION
Acquisition Analysis
Statement showing FVNA distribution
Particulars Amount PEACE (65%) NCI (35%)
Share Capital $690,000.00 448500 241500
Retained earnings $280,000.00 182000 98000
Total BV of Net Assets (A) $970,000.00 $630,500.00 $339,500.00
Plant (6000X.6) $3,600.00 2340 1260
Land (9000X0.6) $5,400.00 3510 1890
Total FV adjustments (B) $9,000.00 5850 3150
Fair Value of Net Assets $979,000.00 636350 342650
Statement showing calculation of Goodwill
Particulars Amount
Consideration Transferred $874,575.00
Non-Controlling Interest $342,650.00
Total Aggregate $1,217,225.00
FVNA $979,000.00
Goodwill $238,225.00
Journal entry for acquisition of equity interest
Journal Entry
Particulars Debit Credit
Acquisition Entry
Investment in Miles $874,575.00
Cash $874,575.00
(Being entry passed for recording acquisition of equity interest)

2CONSOLIDATION
Business Combination Valuation Reserve Entries
Journal Entry
Particulars Debit Credit
Business combination Valuation entries
Entries at 30 June 2018
Accumulated Depreciation $6,000.00
Deferred tax Liability $2,400.00
Business combination Valuation Reserve (BCVR) $3,600.00
(Being plant undervalued now corrected)
Depreciation expenses $57,108.33
Retained earnings (4 years) $4,000.00
Accumulated Depreciation $61,108.33
Deferred tax liability $24,443.33
Income Tax Expenses $22,843.33
Retained Earning $1,600.00
Land $9,000.00
Deferred Tax Liability $3,600.00
Business Combination valuation reserve $5,400.00
(being land was undervalued now corrected)
Goodwill $238,225.00
Business Combination Valuation Entries $238,225.00
(Being Goodwill recorded)
Non-Controlling Interest
Calculation of Non-Controlling Interest
Particulars Amount
Total Shares 690000
Shares Acquired 448500
Shares for NCI 241500
NCI Percentage holdings 35%

3CONSOLIDATION
NCI $342,650.00
Pre-Acquisition entry
Journal Entry
Particulars Debit Credit
Pre-Acquisition entry
Entries at 1 July 2014
Retained earning $448,500.00
Share Capital $182,000.00
Business Combination Valuation Reserve $244,075.00
Shares in Miel Ltd $874,575.00
Non-controlling Interest
Retained earning $98,000.00
Share Capital $241,500.00
Business Combination Valuation Reserve $3,150.00
NCI $342,650.00
Entries at 30 June 2018
NCI Share of profit for 2017-18 $28,861.00
NCI $28,861.00
Consolidation Adjustment Entries
Journal Entry
Particulars Debit Credit
Intra group transaction for consolidation adjustment
Sales and profit in closing Inventory
Sales revenue $45,000.00
Cost Of Sales $45,000.00
Sales Revenue $15,000.00
Cost of Sales $8,000.00
Inventory $7,000.00

4CONSOLIDATION
Deferred Tax Assets $2,800.00
Income Tax Expenses $2,800.00
Profit in opening inventory
Retained earning $432.00
Income Tax Expenses $288.00
Cost Of Sales $720.00
Sales of Plant
Sales Proceed from plant $88,000.00
carrying amount of plant sold $60,000.00
Plant $28,000.00
Deferred Tax Assets $11,200.00
Income tax Expenses $11,200.00
Accumulated Depreciation $7,000.00
Depreciation Expenses $7,000.00
Income Tax expenses $2,800.00
Deferred Tax Assets $2,800.00
Sales of Equipment
Sales Proceed from Equipment $25,000.00
carrying amount of Equipment sold $18,000.00
Equipment $7,000.00
Deferred Tax Assets $2,800.00
Income Tax Expenses $2,800.00
Accumulated Depreciation $583.33
Depreciation expenses $583.33
Income Tax Expenses $233.33
Deferred Tax Assets $233.33
Dividend
Dividend Payable $16,079.70
Dividend Receivable $16,079.70

5CONSOLIDATION
Consolidated Worksheet
Particulars PEACE MIEL Adjustments Group
Debit Credit
Sales $3,625,810.00 $2,481,765.00 $60,000.00 $6,047,575.00
COGS $1,765,800.00 $1,414,820.00 $53,720.00 $3,126,900.00
Gross Profit $1,860,010.00 $1,066,945.00 $2,920,675.00
Other income
(expenses) $271,060.00 $27,800.00 $35,000.00 $263,860.00
Operating
Income $2,131,070.00 $1,094,745.00 $3,184,535.00
Expenses
-
$1,858,000.00 -$958,745.00 $57,108.33 $7,583.33
-
$2,866,270.00
Net profit
before tax $273,070.00 $136,000.00 $318,265.00
Income Tax
expenses -$77,249.00 -$53,540.00 $3,321.33 $39,643.33 -$94,467.00
Net Profit
After tax $195,821.00 $82,460.00 $223,798.00
Retained
Earnings at 1
July 2017 $655,064.00 $720,520.00 $1,375,584.00
Retained
earnings at 30
June 2018 $827,386.00 $778,242.00 $452,932.00 $1,600.00 $1,154,296.00
Share Capital $1,000,000.00 690000 $182,000.00 $1,508,000.00
Revaluation
Reserve $250,000.00 12000 $262,000.00
BCVR $247,225.00
$247,225.0
0 $0.00
Total
Shareholders’
Equity $2,077,386.00 $1,480,242.00 $2,924,296.00
Accounts
Payable $48,068.00 $41,892.00 $89,960.00

6CONSOLIDATION
Dividend
Payable $23,498.00 $24,738.00 $16,079.70 $32,156.30
Income Tax
Payable $109,228.00 $54,400.00 $163,628.00
Other Payable $21,643.00 $11,783.00 $33,426.00
Total Current
Liability $202,437.00 $132,813.00 $319,170.30
Bank Loan $280,000.00 $80,000.00 $360,000.00
Total Liability $482,437.00 $212,813.00 $679,170.30
Total Liability
and Equity $2,559,823.00 $1,693,055.00 $3,603,466.30
Cash $683,502.00 $154,744.00 $838,246.00
Accounts
Receivable $56,642.00 $37,010.00 $93,652.00
Less:
Allowances for
doubtful debt -$10,000.00 -$4,800.00 -$14,800.00
Dividend
Receivable $120,000.00 $16,079.70 $103,920.30
Inventory $17,158.00 $38,950.00 $7,000.00 $49,108.00
Total Current
Assets $867,302.00 $225,904.00 $1,070,126.30
Deferred Tax
Assets $79,947.00 $2,151.00 $41,243.33 $9,033.33 $114,308.00
Investment in
MIEL $874,575.00
$874,575.0
0 $0.00
Land $138,000.00 $465,000.00 $9,000.00 $612,000.00
Property plant
and equipment $900,000.00 $1,500,000.00 $35,000.00 $2,365,000.00
Less:
Accumulated
depreciation -$300,000.00 -$500,000.00 $13,583.33 $61,108.33 -$847,525.00
Goodwill $238,225.00 $238,225.00
Total
Noncurrent
assets $1,692,522.00 $1,467,151.00 $2,243,783.00
Total Assets $2,559,824.00 $1,693,055.00
$1,355,718.
03
$1,352,568
.03 $3,313,909.30

7CONSOLIDATION
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