ACC705 Corporate Accounting: Consolidated Financial Statements Report

This report presents a comprehensive analysis of corporate accounting principles, focusing on the consolidation of financial statements. It examines the acquisition of Frank Ltd by Griffin Ltd, detailing the fair value adjustments to assets like land, plant, and inventory, and the calculation of goodwill. The report includes journal entries for pre-acquisition and BCV adjustments, a detailed consolidated worksheet, and the preparation of consolidated financial statements, including the income statement and balance sheet. The analysis covers revenue, expenses, profit before tax, and comprehensive income, alongside the changes in equity and liabilities. The report also provides a bibliography of relevant accounting literature.

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

1CORPORATE ACCOUNTING
Table of Contents
Acquisition Analysis:.......................................................................................................................2
Journal Entries:................................................................................................................................3
Consolidated Worksheet:.................................................................................................................4
Prepare the consolidated financial statements of Griffin Ltd at 30 June 2019:...............................6
Bibliography:...................................................................................................................................9

2CORPORATE ACCOUNTING
Acquisition Analysis:
Land Value Equity Value
Fair value 2,10,000 Share Capital 2,00,000
Carrying amount 1,90,000 General Reserve 20,000
Land 20,000 Retained earnings 50,000
Equity 2,70,000
Plant Value
Fair value 1,86,000 Inventory Value
Carrying amount 1,80,000 Fair value 28,000
Plant 6,000 Carrying amount 20,000
Inventory 8,000
Guarantee
liability Value
Guarantee liability 10,000 Inventory Value
Fair value 28,000
Brands Value Carrying amount 20,000
Brands 12,000 Inventory 8,000
Particulars Value
Equity 2,70,000
Inventory 5,600
Land 14,000
Plant 4,200
Guarantee liability -7,000
Brands 8,400
Net Fair value 2,95,200
Particulars Value
Acquisition capital 3,30,000
Dividend received 10,000
Consideration transferred 3,20,000
Particulars Value
Consideration transferred 3,20,000
Net Fair value 2,95,200
Goodwill 24,800

3CORPORATE ACCOUNTING
The above table provides information about the calculation of goodwill, which is
conducted after evaluating the fair value of assets that is been acquired by Griffin Ltd of Frank
Ltd.
Journal Entries:
BCV entries Pre-acquisitions entries
Particulars Debit Credit Particulars Debit Credit
Depreciation expense 600
Retained Earnings
(1/7/16) 50,000
Sale of Plant (Gain) 3,000 Share capital 2,00,000
Income tax expense 1,080 General reserve 20,000
Retained earnings 1,680 BCV reserve 50,000
Transfer from BCV
reserve 4,200 Shares in Frank Ltd 3,20,000
Particulars Debit Credit Particulars Debit Credit
Brands 12,000
Retained Earnings
(1/7/19) 56,600
BCV reserve 8,400 Share capital 2,00,000
Deferred tax liability 3,600 General reserve 33,000
BCV reserve 30,400
Particulars Debit Credit Shares in Frank Ltd 3,20,000
Transfer from BCV
reserve 7,000
Income tax expense 3,000 Particulars Debit Credit
Guarantee expense 7,500 BCV reserve 7,000
Gain on guarantee 2,500
Transfer from BCV
reserve 7,000
Particulars Debit Credit
Transfer from BCV
reserve 4,200

4CORPORATE ACCOUNTING
Goodwill 24,800 BCV reserve 4,200
BCV reserve 24,800
General reserve 15,000
Transfer to general
reserve 15,000
The journal entries depicted in the above table states about the overall BCV and other
acquisition entries, which is required for completing consolidated worksheet and deriving the
accurate value of the firm.
Consolidated Worksheet:
Particulars Griffin Ltd Frank Ltd
Adjustments
Debit Credit Group
Revenue
$
1,90,000.00
$
1,10,000.0
0
$
7,500.00
$
3,07,500.
00
Expenses
$
80,000.00
$
76,000.00
$
600.00
$
2,500.00
$
1,54,100.
00
Trading profit
$
1,10,000.00
$
34,000.00
$
1,53,400.
00
Gains/losses on sale of non-
current assets
$
5,000.00
$
4,000.00
$
3,000.00
$
6,000.00
Profit before Tax
$
1,15,000.00
$
38,000.00
$
1,59,400.
00
Tax Expenses
$
40,000.00
$
6,000.00
$
3,000.00
$
1,080.00
$
47,920.00
Profit
$
75,000.00
$
32,000.00
$
1,11,480.
00
Retained Earnings (1/7/18) $
80,000.00
$
88,000.00
$
58,280.0
$
1,09,720.

5CORPORATE ACCOUNTING
0 00
Transfer from BCVR
$
-
$
-
$
11,200.0
0
$
11,200.0
0
$
-
Dividend declared
$
34,000.00
$
-
$
34,000.00
T'fer to gen reserve
$
15,000.00
$
15,000.0
0
$
-
Retained Earnings
(30/6/19)
$
1,21,000.00
$
1,05,000.0
0
$
1,87,200.
00
Share Capital
$
2,80,000.00
$
2,00,000.0
0
$
2,00,000.
00
$
2,80,000.
00
General reserve
$
20,000.00
$
48,000.00
$
48,000.0
0
$
20,000.00
BCVR
$
-
$
-
$
37,400.0
0
$
37,400.0
0
$
-
$
4,21,000.00
$
3,53,000.0
0
$
4,87,200.
00
Asset Revaluation Surplus
(1/7/18)
$
12,000.00
$
-
$
12,000.00
Gains/Losses
$
12,000.00
$
-
$
12,000.00
Asset Revaluation Surplus
(30/6/19)
$
24,000.00
$
-
$
24,000.00
Total Equity
$
4,45,000.00
$
3,53,000.0
0
$
5,11,200.
00
Provisions
$
15,000.00
$
12,000.00
$
27,000.00
Payables
$
40,000.00
$
8,000.00
$
48,000.00
Defer.tax liabilities
$
-
$
-
$
3,600.00
$
3,600.00
Total Liabilities
$
55,000.00
$
20,000.00
$
78,600.00
Total Equity & Liabilities
$
5,00,000.00
$
3,73,000.0
0
$
5,89,800.
00
Shares in Frank Ltd
$
3,20,000.00
$
-
$
3,20,000.
$
-

6CORPORATE ACCOUNTING
00
Inventory
$
30,000.00
$
51,000.00
$
81,000.00
Receivables
$
28,000.00
$
12,000.00
$
40,000.00
Cash
$
12,000.00
$
30,000.00
$
42,000.00
Plant
$
2,30,000.00
$
3,20,000.0
0
$
5,50,000.
00
Accum. Depreciation
$ -
1,20,000.00
$ -
40,000.00
$ -
1,60,000.
00
Brand
$
-
$
-
$
12,000.0
0
$
12,000.00
Goodwill
$
-
$
-
$
24,800.0
0
$
24,800.00
Total Assets
$
5,00,000.00
$
3,73,000.0
0
$
5,89,800.
00
Prepare the consolidated financial statements of Griffin Ltd at 30 June 2019:
Consolidated Income Statement:-
Particulars Amount
Revenue $ 3,07,500.00
Expenses $ 1,54,100.00
Operating Profit $ 1,53,400.00
Profit on Non-Current Assets $ 6,000.00
Profit before Tax $ 1,59,400.00
Income Tax Expenses $ 47,920.00
Net Profit before tax $ 1,11,480.00
Gain on revaluation of assets $ 12,000.00
Comprehensive income for the period $ 1,23,480.00
Consolidated change in equity-
Comprehensive income for the period $ 1,23,480.00

7CORPORATE ACCOUNTING
Retained Earnings (1/7/18) $ 1,09,720.00
Profit for the period $ 1,11,480.00
Dividend declared $ -34,000.00
Retained Earnings (30/6/19) $ 1,87,200.00
Share capital balance at 1 July 2018 $ 2,80,000.00
Share capital balance at 30 June 2019 $ 2,80,000.00
General reserve at 1 July 2018 $ 20,000.00
General reserve at 30 June 2019 $ 20,000.00
Asset Revaluation Surplus (30/6/19) $ 12,000.00
Gains/Losses $ 12,000.00
Asset Revaluation Surplus (30/6/19) $ 24,000.00
Consolidated Balance Sheet:
Particulars Amount
Current Assets:
Cash $ 42,000.00
Inventory $ 81,000.00
Receivables $ 40,000.00
Total Current Assets $ 1,63,000.00
Non-Current Assets:
Plant $ 5,50,000.00
Accum. Depreciation $ -1,60,000.00
Land $ 12,000.00
Shares in Frank Ltd $ -
Goodwill $ 24,800.00
Total Non-Current Assets $ 4,26,800.00
Total Assets $ 5,89,800.00
Current Liabilities:
Provisions $ 27,000.00
Payables $ 48,000.00
Total Current Liabilities $ 75,000.00
Non-Current Liabilities:
Defer.tax liabilities $ 3,600.00
Total Non-Current
Liabilities $ 3,600.00
Total Liabilities $ 78,600.00

8CORPORATE ACCOUNTING
Equity:
Share Capital $ 2,80,000.00
Asset Revaluation Surplus $ 44,000.00
Retained Earnings $ 1,87,200.00
Total Equity $ 5,11,200.00
Total Liabilities and Equity $ 5,89,800.00

9CORPORATE ACCOUNTING
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