ACC705 Corporate Accounting: Analysis and Consolidation Process

This ACC705 assignment solution focuses on the consolidation of financial statements for Tuna Ltd and its subsidiary, Brim Ltd, following Tuna Ltd's acquisition of Brim Ltd's shares. The solution includes consolidation journal entries to adjust for business combination valuations, pre-acquisition equity, sales and profits in closing inventory, profits in opening inventory, and intercompany transactions such as the sale of plant and inventory. The consolidation journal entries address accumulated depreciation, deferred tax liabilities, goodwill, and the elimination of intercompany sales. The assignment further presents an income statement, balance sheet, and a consolidation worksheet, detailing adjustments for sales revenue, cost of sales, trading expenses, depreciation, and gains or losses on the sale of machinery. These adjustments ensure the accurate presentation of the consolidated financial position and performance of the combined entity. Desklib provides access to a wealth of similar solved assignments and past papers to aid students in their studies.

Running head: CORPORATE ACCOUNTING
Corporate Accounting
Name of the Student:
Name of the University:
Author’s Note:

1CORPORATE ACCOUNTING
Table of Contents
Requirement 1:.................................................................................................................................2
Requirement 2:.................................................................................................................................3
Requirement 3:.................................................................................................................................6

2CORPORATE ACCOUNTING
Requirement 1:

3CORPORATE ACCOUNTING
Requirement 2:

4CORPORATE ACCOUNTING
Dr. Cr.
Date Amount Amount
1 Business Combination Valuation Entries:
1.a Accumulated Depreciation A/c. 30000
Plant A/c. $27,000
Deferred Tax Liability A/c. $900
Business Combination Valuation
Reserve A/c. $2,100
1.b Depreciation Expense A/c. 600
Retained Earnings A/c. (1/7/16) 600
Accumulated Depreciation A/c. 1200
1.c Deferred Tax Liability A/c. 360
Income Tax Expense A/c. 180
Retained Earnings A/c. (1/7/16) 180
1.d Goodwill A/c. $2,250
Business Combination Valuation
Reserve A/c. $2,250
2 Pre-Acquisition Entries:
At 1/7/15:
2.a Share Capital A/c. $66,000
Retained Earnings A/c. (1/7/15) $6,000
Business Combination Valuation
Reserve A/c. $18,000
Shares in Brim Ltd. A/c. $90,000
At 30/6/17:
2.b Share Capital A/c. $66,000
Retained Earnings A/c. (1/7/16) 19650
Business Combination Valuation
Reserve A/c. $4,350
Shares in Brim Ltd. A/c. $90,000
Particulars
In the books of Tuna Ltd.
Consolidation Journal Entries

5CORPORATE ACCOUNTING
3 Sales & Profit in Closing Inventory:
3.a Sales Revenue A/c. 21000
Cost of Sales A/c. 21000
3.b Sales Revenue A/c. 4500
Cost of Sales A/c. 4200
Inventory A/c. 300
3.c Deferred Tax Asset A/c. 90
Income Tax Expense A/c. 90
4 Profit in Opening Inventory of Brim Ltd.:
Retained Earnings A/c. (1/7/16) 420
Income Tax Expenses A/c. 180
Cost of Sales A/c. 600
5 Sale of Plant in Current Period:
5.a Proceeds on Sale of Plant A/c. 15000
Carrying Amount of Plant Sold A/c. 14000
Plant A/c. 1000
5.b Deferred Tax Assets A/c. 300
Income Tax Expense A/c. 300
5.c Accumulated Depreciation A/c. 100
Depreciation Expense A/c. 100
5.d Income Tax Expense A/c. 30
Deferred Tax Assets A/c. 30

6CORPORATE ACCOUNTING
6 Sale of Inventory classified as Plant in earlier period:
6.a Retained Earnings A/c. (1/7/16) 1400
Deferred Tax Assets A/c. 600
Plant A/c. 2000
6.b Accumulated Depreciation A/c. 600
Depreciation Expense A/c. 400
Retained Earnings A/c. (1/7/16) 200
6.c Income Tax Expense A/c. 120
Retained Earnings A/c. (1/7/16) 60
Deferred Tax Assets A/c. 180
7 Sale of Plant classified as Inventory in Current Period:
7.a Proceeds on Sale of Plant A/c. 9000
Carrying Amount of Plant Sold A/c. 7500
Cost of Sales A/c. 1500

7CORPORATE ACCOUNTING
Requirement 3:
Income Statement:

8CORPORATE ACCOUNTING
Balance Sheet:

9CORPORATE ACCOUNTING
Particulars Tuna Ltd. Brim Ltd.
Journal
Nos. Dr. Cr.
Journal
Nos. Group
Sales Revenue $64,500 $78,000 3.a,3.b $25,500 $1,17,000
Cost of Sales $30,900 $46,350 $27,300
3.a,3.b,
4,7.a $49,950
Gross Profit $33,600 $31,650 $67,050
Trading Expenses $4,800 $9,000 $13,800
Offi ce Expenses $7,950 $4,050 $12,000
Depreciation $1,800 $3,900 1.b $600 $500 5.c,6.b $5,800
$14,550 $16,950 $31,600
Profit from Trading $19,050 $14,700 $35,450
Proceeds from Sale of Plant $9,000 $15,000 5.a,7.a $24,000 $0
Carrying Amount of Plant Sold $7,500 $14,000 $21,500 5.a,7.a $0
Gain/Loss on Sale of machinery $1,500 $1,000 $0
Profit before Tax $20,550 $15,700 $35,450
Tax Expenses $11,100 $7,300
4,5.d,6.
c $330 $570
1.c,3.c,5
.b $18,160
Profit $9,450 $8,400 $17,290
Reatined Earnings (1/7/16) $48,000 $31,500
1.b,2.b,
4,6.a,6.
c $22,130 $380 1.c,6.b $57,750
Retained Earnings (30/6/17) $57,450 $39,900 $75,040
Share Capital $96,000 $66,000 2.b $66,000 $96,000
BCVR 2.b $4,350 $4,350 1.a,1.d $0
Total Equity $1,53,450 $1,05,900 $1,71,040
Current Liabilities $21,100 $10,500 $31,600
Deferred Tax Liability $11,000 $15,000 1.c $360 $900 1.a $26,540
Total Liabilities $32,100 $25,500 $58,140
Total Equities & Liabilities $1,85,550 $1,31,400 $2,29,180
Plant $57,000 $1,07,250 $30,000
1.a,5.a,6
.a $1,34,250
Accumulated Depreciation -$18,300 -$33,450
1.a,5.c,
6.b $30,700 $1,200 1.b -$22,250
Intangibles $12,000 $11,100 $23,100
Shares in Brim Ltd. $90,000 $90,000 2.b $0
Deferred Tax Asset $8,100 $9,450
3.c,5.b,
6.a $990 $210 5.d,6.c $18,330
Inventory $28,500 $24,600 $300 3.b $52,800
Receivables $8,250 $12,450 $20,700
Goodwill $0 $0 1.d $2,250 $2,250
Total Assets $1,85,550 $1,31,400 $2,29,180
Adjustments
Consolidation Worksheet: