Financial Accounting Assignment: Consolidation of Jan Ltd and Dean Ltd

This report addresses an advanced financial accounting assignment concerning the consolidation of Jan Ltd and Dean Ltd. The solution begins with consolidation journal entries, detailing the elimination of intercompany transactions such as loans, interest, and dividends. It proceeds to construct a consolidated comprehensive income statement, presenting sales, expenses, and profit after tax. Furthermore, a consolidated balance sheet is prepared, displaying assets, liabilities, and equity. The report includes a detailed acquisition analysis, outlining the fair value of assets acquired and the calculation of goodwill. The consolidation worksheet provides a comprehensive overview of the financial data, including adjustments and eliminations necessary for the consolidation process. The final consolidated financial statements provide a clear picture of the group's financial performance and position. This assignment demonstrates the application of consolidation principles in financial accounting.

Consolidation journal entries for the consolidation of Jan Ltd. And Dean Ltd.
Sr.
No. Particulars Debit Credit
1 Share Capital $100,000
General reserve $60,000
Retained Earnings (1/7/18) $17,500
Goodwill $10,000
To Shares in Dean Ltd. $187,500
(Pre- acquisition entry for acquiring Dean Ltd. recorded) (refer WN-1)
2 Loan payable $5,000
Other revenue $500
To Loan receivable $5,000
To Expenses $500
(Loan given by Jan Ltd to Dean Ltd eliminated along with interest on said loan)
3 Other revenue $4,000
To expenses $4,000
(Rent for office space given by Jan Ltd to Dean ltd eliminated)
4 Dividend revenue $7,500
To Interim dividend paid $2,500
To Final dividend declared $5,000
(Dividends revenue / expenses paid / declared by subsidiary eliminated)
5 Final dividend payable $5,000
To Dividend receivable $5,000
(Dividend payable by Dean Ltd eliminated along with dividend receivable)

JAN LTD.
Consolidated Comprehensive Income Statement for the period ended 30 June 2019
Particulars Amount
Sales revenue $588,500
Other revenue $5,500
Total income $594,000
Less: Expenses $531,500
Profit before tax $62,500
Less: Tax expenses $25,000
Profit after tax $37,500
Total comprehensive income $37,500
JAN LTD.
Consolidated Balance Sheet as at 30 June, 2019
Particulars Amount
ASSETS
Non-Current Assets
Property, Plant & Equipment $223,500
Goodwill $10,000
Current Assets
Other investments $150,000
Total Assets $383,500
LIABILITIES
Non-Current Liabilities
Other non-current liabilities $93,500
Current Liabilities
Final dividend payable $15,000
Total liabilities $108,500
Net assets (Assets - liabilities) $275,000
EQUITY
Share capital $150,000
Asset revaluation surplus $90,000
Retained earnings $35,000
Total Equities $275,000

WN-1: Acquisition analysis of Dean Ltd. as on 1 July, 2018
Particulars Amount
Share Capital $100,000
General reserve $60,000
Retained Earnings $17,500
Fair value of assets acquired $177,500
Consideration transferred $187,500
Goodwill on acquisition of Dean Ltd. $10,000
WN-2: Consolidation worksheet for the period ended 30 June, 2019
Particulars Jan Ltd. Dean Ltd. Total Ref Adjustment entries Ref Group
Debit ($) Credit
($)
Sales revenue $388,500 $200,000 $588,500 $588,500
Dividend revenue $7,500 $0 $7,500 4 $7,500 $0
Other revenue $10,000 $0 $10,000 2,3 $4,500 $5,500
Total revenue $406,000 $200,000 $606,000 $594,000
Total expenses -$360,000 -$176,000 -$536,000 $4,500 2,3 -$531,500
Profit before income tax $46,000 $24,000 $70,000 $62,500
Income tax expense -$15,000 -$10,000 -$25,000 -$25,000
Profit $31,000 $14,000 $45,000 $37,500
Retained earnings (1/7/18) $20,000 $17,500 $37,500 1 $17,500 $20,000
Total available for appropriation $51,000 $31,500 $82,500 $57,500
Interim dividend paid -$7,500 -$2,500 -$10,000 $2,500 4 -$7,500
Final dividend declared -$15,000 -$5,000 -$20,000 $5,000 4 -$15,000
-$22,500 -$7,500 -$30,000 -$22,500
Retained Earnings 30/6/19 $28,500 $24,000 $52,500 $35,000
Shares in Dean Ltd. $187,500 $0 $187,500 $187,500 1 $0
Other investments $150,000 $0 $150,000 $150,000
Dividend receivable $5,000 $0 $5,000 $5,000 5 $0
Loan receivable $5,000 $0 $5,000 $5,000 2 $0
Property,plant and equipment $18,500 $205,000 $223,500 $223,500
Goodwill $0 1 $10,000 $10,000
Total assets $366,000 $205,000 $571,000 $383,500
Final dividend payable $15,000 $5,000 $20,000 5 $5,000 $15,000
Loan payable $0 $5,000 $5,000 2 $5,000 $0

Other non current liabilities $82,500 $11,000 $93,500 $93,500
Total liabilities $97,500 $21,000 $118,500 $108,500
Net assets $268,500 $184,000 $452,500 $275,000
Share capital $150,000 $100,000 $250,000 1 $100,000 $150,000
General reserve $90,000 $60,000 $150,000 1 $60,000 $90,000
Retained earnings $28,500 $24,000 $52,500 $17,500 $35,000
Total equity $268,500 $184,000 $452,500 $275,000