Analysis of Consolidated Financial Accounts and Group Evaluation

This report provides an evaluation of Grape and Duch Limited, focusing on correcting accounting errors and preparing consolidated financial statements. It addresses unrealized profits, incorrect inventory charges, omitted land sale losses, and dividend adjustments. The report includes consolidation entries, a consolidation worksheet, and consolidated financial accounts, demonstrating the importance of accurate accounting for assessing company performance and ensuring financial stability. It also highlights the adjustments needed for a clear representation of work-related activities and improved financial reporting, emphasizing how proper accounting practices contribute to business growth and expansion. Desklib offers a wealth of similar solved assignments for students.

Company Accounting

Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
A. Evaluation Report of the group.........................................................................................3
B. Consolidation Entries with Narration:...............................................................................4
C. Consolidation Worksheet...................................................................................................5
D. Consolidated Financial Accounts......................................................................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
The report prepared below takes in account journal entries prepared for the two stated
companies. It reflects the importance for preparation of accounts which are incorrect and needs
to be corrected. Accounting is a process that involves rectifying errors if any, having an idea
about working and functioning of different companies in a competitive environment. It also
prepares the statement of financial position which reflects finance related stability and
sustainability of related firms and organisations in environment. It also helps to understand
which accounts would prove to be fruitful and profitable for better results of the enterprise. It
includes adjustments that were required for reflecting actual work-related performances and how
they must be taken in account for better presentation of work carried out. It also takes includes
presentation of the ascertained data for predicting performances carried out by the firm in
specified and set time duration (Arif and et. al., 2020).
TASK
A. Evaluation Report of the group
Evaluation report of Grape and Duch Limited
Account name Amount
Evaluation report on why it is
wrong
Revenue $55000
Unrealised profit on sale made to
subsidiary must be deducted
whicl making consolidated
balance sheet that is ($55000 -
10 %) / 120 * 20 = $8250. It is
unrealised profit which must be
elimninated from the total sales.
Plant and Machine $28000
Investory purchase from the
subsidiary wrongly charged to
plant and machinery account.
Hence plant and machine to be
reduced by $28000 and Investory
should be increased with the
same amount. However
unrelised profit on inventory
must be eliminated of $8000.

Sale of Land $25000
Loss on sale of land to be
recorded in the books that is
$7000. Such amount is omitted
to be recorded in the books of
accounts and due to this the
profits of the Grape limited are
increased by $7000.
Dividend $44000
The dividend received by the
grape limited will be credited in
its profit and loss account as
income being duck limited is its
100 % subsidiary company. The
payment made by duck limited
to its shareholder has been
adjusted in the next year of
$26000.
Rent Payment $1400
It will be as as unearned income
in the bools of Grape limited as
on accruel basis of accounting
the rental income to be booked
in the income statement
whether received or not because
when its due then it should be
recorded.
B. Consolidation Entries with Narration:
Particular Debit Credit
Business Purchase Dr
To Liquidator of Vendor Company
(Being 100% shares acquired of Duck Limited as on
1/07/2020 by Grape Limited)
$900000 $900000
Net Assets Taken Dr
To Business Purchase Account
(Being net assets taken over recorded at the fair value)
$940000 $940000
Goodwill Dr
To Business Purchase Account
(Being Goodwill Recoded in the books for the excess
$40000 $40000

payment being made by the Grape limited to Duck
limited shareholders)
Liquidator of Vendor Company Dr
To Equity Share Capital in Grape Limited
(Bring equity shares are being issues to the shareholder
of the Duck Limited as Consideration of PC)
$900000 $900000
C. Consolidation Worksheet
Attached in Excel
D. Consolidated Financial Accounts
Attached in Excel
CONCLUSION
The report prepared above takes in account consolidated statements and accounts prepared
so far by both companies and how they must be well recorded so that the performance of the
companies could be judged. The report also involves the working and adjustments that are to be
made for having a clear and better picture of the work-related activities in a firm. It also reflects
how the accounts are not managed properly and what could be done for giving a better idea
about the running of various companies in environment. It further includes the improvement of
accounts being prepared and how it would help in growth and expansion of companies in market.
It also explains terms such as sales, revenue, rent paid, plant and machineries, dividend, sale of
land. It also includes presentation with the help of graphs related to activities which take place in
a organisation over a period of time. The report further gives an idea about errors and omission
that has taken place over a duration and how it would help the business in adapting changes and
help iot to grow and expand in future course of time. It further contributes in various functions
such as acquiring assets and paying off the liabilities that are related to company and which
would help it to work in better ways.

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