Consolidation Work Sheet of Parent Ltd

Question 1
Consolidation work sheet
Parent Ltd
Subsidiary
Ltd DR CR
Consolidate
d
Sales 700000 500000 1200000
Dividend income 2000 0 2000 0
Expenses 290000 260000 550000
Profit 412000 240000 650000
Retained earnings 1 July 2015 300000 250000
25000
0 300000
Less Dividend declared -1000 -2000 2000 -1000
Retained earnings 30 June 2016 711000 488000 949000
Share capital 1000000 600000
60000
0 1000000
General reserve 200000 0 200000
Business combination valuation
reserve 50000 50000 0
Trade and other creditors 530000 208000 738000
Dividend payable 1000 2000 2000 1000
Income tax payable 140000 42000 182000
2582000 1340000 3070000
Trade and other receivables 643000 508000 1151000
Dividend receivable 2000 0 2000 0
Shares in Subsidiary Ltd 900000 -
90000
0 0
Property plant and equipment (net) 730000 710000 1440000
Inventories 200000 20000 220000
Other assets 107000 102000 209000
Goodwill on consolidation 50000 50000
2582000 1340000 3070000
Working notes
Acquisition analysis
Share capital 600000
Retained earnings 250000
Net fair value of identifiable assets 850000
Consideration transferred 900000
goodwill 50000

Consolidation journal entries
Business combination valuation entry
Goodwill Dr 50000
Business combination valuation reserve Cr 50000
( to recognize goodwill)
Pre-acquisition entries
At 1/7/15: (not required – not posted)
Retained earnings (1/7/15) Dr 250000
Share capital Dr 600000
Business combination valuation reserve Dr 50000
Shares in Subsidiary Ltd Cr 900000
(to eliminate investment in subsidiary)
At 30/6/16 (Posted to the consolidation worksheet):
Retained earnings (30/6/16) Dr 250000
Share capital Dr 600000
Business combination valuation reserve Dr 50000
Shares in Subsidiary Ltd Cr 900000
(to eliminate investment in subsidiary)
Intra-group adjustment entries
Dividend payable Dr 2000
Dividend receivable Cr 2000
( to eliminate intra-group dividend)
Dividend income Dr 2000
Dividend declared Cr 2000
( to eliminate intra-group dividend)

Question 2
Consolidation work sheet
Consolidation Parent Ltd Subsidiary Ltd DR CR Consolidated
Sales 15000 16500 31500
Dividend income 60 0 60 0
Expenses -5140 -5685 -10825
Profit 9920 10815 20675
Retained earnings 1 July 2015 6000 5000 5000 6000
Less Dividend declared -120 -60 60 -120
Retained earnings 30 June 2016 15800 15755 26555
Share capital 40000 10000 10000 40000
General reserve 60000 3000 3000 60000
Business combination valuation reserve 2000 2000 0
Loan payable 5000 3500 8500
Dividend payable 120 60 60 120
120920 32315 135175
Trade and other receivables 4000 3700 7700
Dividend receivable 60 0 60 0
Shares in Subsidiary Ltd 20000 -
2000
0 0
Property plant and equipment (net) 70000 21000 91000
Inventories 18750 7115 25865
Other assets 8110 500 8610
Goodwill on consolidation 2000 2000
120920 32315 135175
Working notes
Acquisition analysis
Share capital 10000
General reserve 3000
Retained earnings 5000
Net fair value of identifiable assets 18000
Consideration transferred 20000
Goodwill 2000

Business combination valuation entry
Goodwill Dr 2000
Business combination valuation reserve Cr 2000
( to recognize goodwill)
Pre-acquisition entries
At 1/7/15: (not required – not posted)
Retained earnings (1/7/15) Dr 5000
Share capital Dr 10000
General reserve Dr 3000
Business combination valuation reserve Dr 2000
Shares in Subsidiary Ltd Cr 20000
(to eliminate investment in subsidiary)
At 30/6/16 (Posted to the consolidation worksheet):
Retained earnings (30/6/16) Dr 5000
Share capital Dr 10000
General reserve Dr 3000
Business combination valuation reserve Dr 2000
Shares in Subsidiary Ltd Cr 20000
(to eliminate investment in subsidiary)
Intra-group adjustment entries
Dividend payable Dr 60
Dividend receivable Cr 60
( to eliminate intra-group dividend)
Dividend income Dr 60
Dividend declared Cr 60
( to eliminate intra-group dividend)
Assumption: It is assumed that General reserve was held by the subsidiary limited on 1 July
2015 i.e. on date of acquisition with the same amount i.e. $3000.

Question 3
Acquisition analysis
Consideration transferred 430,000.00
Net fair value of identifiable assets 192,000.00
Less: Goodwill 238,000.00
Calculation of Net fair value of identifiable assets
Share capital 120,000.00
Retained earnings 50,000.00
General reserve 10,000.00
Equipment (20000-(14000-6000)) 12,000.00
Net fair value of identifiable assets 192,000.00
Consolidation entries 1/7/2015
Business combination valuation entries
Accumulated depreciation – equipment Dr 6,000.00
equipment Dr 6,000.00
Business combination valuation reserve Cr 12,000.00
( to record equipment at fair value)
Goodwill Dr 238,000.00
Business combination valuation reserve Cr 238,000.00
( to recognize goodwill)
Pre-acquisition entry (not required – not posted)
Retained earnings Dr 50,000.00
Share capital Dr 120,000.00
General reserve Dr 10,000.00
Business combination valuation reserve Dr 250,000.00
Shares in sublime Ltd Cr 430,000.00
(To eliminate investment in subsidiary)
Consolidation entries 30/6/2017

Acquisition entry
Retained earnings Dr 50,000.00
Share capital Dr 120,000.00
General reserve Dr 10,000.00
Business combination valuation reserve Dr 250,000.00
Shares in sublime Ltd Cr 430,000.00
(To eliminate investment in subsidiary)
Business combination valuation entries
Depreciation expense Dr 3,000.00
Retained earnings (30/6/16) Dr 3,000.00
Accumulated depreciation – equipment Cr 6,000.00
( To record depreciation charged on revalued
equipment)
Retained earnings Dr 4,000.00
Goodwill Cr 4,000.00
( To record impairment loss of goodwill)