Consolidated Financial Statements Preparation and Analysis

The task is to create a consolidated statement of profit or loss for a corporate group for the financial year ending on 30th June 2017. This involves aggregating financial data from multiple entities within the group while eliminating intercompany transactions. The assignment also includes accounting for non-controlling interests and understanding their impact on overall profitability. Key components such as sales revenue, cost of sales, other income, operating profit, taxes, and net profit attributable to shareholders must be accurately calculated and presented. Additionally, any comprehensive income items like gains from asset revaluation need inclusion in the final statement. This exercise provides insight into complex financial consolidation processes essential for accurate financial reporting and analysis.

Running head: CONTEMPORARY FINANCIAL ACCOUNTING
Contemporary Financial Accounting
Name of the Student:
Name of the University:
Author’s Note:

1CONTEMPORARY FINANCIAL ACCOUNTING
Table of Contents
Requirement 1:.................................................................................................................................2
Requirement 2:.................................................................................................................................6
Workings:........................................................................................................................................6
Bibliography:...................................................................................................................................7

2CONTEMPORARY FINANCIAL ACCOUNTING
Requirement 1:
Acquisition Analysis:
Particulars
Carrying
Amount
Fair
Value
Net Fair
Value
Share Capital
$250,00
0 $250,000
General Reserve $10,000 $10,000
Asset Revaluation Reserve $15,000 $15,000
Retained Earnings $10,000 $10,000
Inventories $70,000 $80,000 $10,000
Land $65,000 $85,000 $20,000
Plant & Equipment $70,000 $90,000 $20,000
Trademark $100,000
$110,00
0 $10,000
Goodwill $25,000 ($25,000)
Net Fair Value of Identifiable Assets &
Liabilities $320,000
Purchase Consideration $264,800
Add: Non-Controlling Interest (@20%) $64,000
Total $328,800
Goodwill Acquired by Parent $8,800
Unrecorded Goodwill ($11,200)
Consolidation Worksheet Entries:
Dr. Cr.
Dat
e Particulars Amount Amount

3CONTEMPORARY FINANCIAL ACCOUNTING
1 Business Combinatiuon Valuation Entry as on 30th July, 2017:
a Cost of Sales A/c. $10,000
Income Tax Expenses A/c. $3,000
Transfer from Business
Valuation Combination
Reserve A/c. $7,000
b Gain on Sale of Land A/c. $20,000
Income Tax Expenses A/c. $6,000
Transfer from Business
Valuation Combination
Reserve A/c. $14,000
c Trademarks A/c. $10,000
Deferred Tax Liability A/c. $3,000
Business Combination
Valuation Reserve A/c. $7,000
d
Accumulated Depreciation - Plant &
equipment A/c.
$130,00
0
Plant & Equipment A/c.
$110,00
0
Deferred Tax Liability A/c. 6000
Business Combination
Valuation Reserve A/c. $14,000
e
Depreciation expense - Plant & Equipment
A/c. $4,000
Accumulated Depreciation -
Plant & equipment A/c. $4,000
f Deferred Tax Liability A/c. $1,200
Income Tax Expenses A/c. $1,200
2 Pre-Acquisition entry 30/6/17:
a Retained Earnings (1/7/16) A/c. $8,000
Share Capital A/c.
$200,00
0
General Reserve A/c. $8,000
Asset Revaluation Reserve A/c. $12,000

4CONTEMPORARY FINANCIAL ACCOUNTING
Business Valuation Combination Reserve
A/c. $48,000
Shares in Squirrel Ltd. A/c.
$264,80
0
Goodwill A/c. $11,200
b Transfer from General Reserve A/c. 6400
General Reserve A/c. 6400
c
Transfer from Business Valuation
Combination Reserve A/c. 16800
Business Valuation
Combination Reserve A/c. 16800
3 NCI Share of Equity at 1/7/16:
Retained Earnings (1/7/16) A/c. $2,000
Share Capital A/c. $50,000
General Reserve A/c. $2,000
Asset Revaluation Reserve A/c. $3,000
Business Valuation Combination Reserve
A/c. $12,000
NCI A/c. $69,000
4
NCI Share of Equity: From 1/7/16 to
30/6/17
a NCI Share of Profit A/c. $40
NCI A/c. $40
b Transfer from General Reserve A/c. 1600
General Reserve A/c. 1600
c
Transfer from Business Valuation
Combination Reserve A/c. 4200
Business Valuation
Combination Reserve A/c. 4200
d
Gain on Revaluation on Specialized Plant
A/c. 1000
NCI A/c. 1000
e NCI A/c. 2000

5CONTEMPORARY FINANCIAL ACCOUNTING
Interim Dividens Paid A/c. 2000
f NCI A/c. 800
Final Dividend Paid A/c. 800
5 Interim Dividend Paid:
Dividend Revenue A/c. 8000
Dividend Paid A/c., 8000
6 Final Dividend Declared:
a Dividedn Payable A/c. 3200
Dividend Declared A/c. 3200
b Dividedn revenue A/c. 3200
Dividend Receivable A/c. 3200
7 Sales of Inventory:
a Sales A/c. 8000
Cost of Goods Sold A/c. 7000
Inventory A/c. 1000
b Deferred Tax Asset A/c. 300
Income Tax expense A/c. 300
c NCI A/c. 140
NCI Share of Profit A/c. 140
8 Transfer Plant to Inventory:
a Gain on Sale of Non-Current Asset A/c. 5000
Inventory A/c. 5000
b Deferred Tax Asset A/c. 1500
income Tax expenses A/c. 1500
c NCI A/c. 700
NCI Share of Profit A/c. 700

6CONTEMPORARY FINANCIAL ACCOUNTING
Requirement 2:
Consolidated Statement of Profit or Loss & other
Comprehensive Income
for the year ended 30th June 2017
Particulars Amount
Sales Revenue $364,000
Cost of Sales ($293,000)
Gross Profit $71,000
Other Income $93,800
Total Revenue $164,800
Other Expenses $88,000
Operating Profit $76,800
Gain/(Losses) from Sale of Non-Current
Assets ($10,000)
Profit before Tax $66,800
Income Tax expenses $19,000
Net Profit for the period $47,800
Add: Share of Non-Controlling Interest $800
Net Profit attributable to Shareholders $48,600
Other Comprehensive Income:
Gain on Revaluation of Specialized Plant $4,000
Net Comprehensive Income $52,600
Workings:
Consolidation Worksheet:
Particulars Parrot Ltd. Squirrel Ltd. Dr. Cr. Group Dr. Cr. Parent
Sales Revenue $200,000 $172,000 7.a $8,000 $364,000 $364,000
Other Income $75,000 $30,000 5,6.b $11,200 $93,800 $93,800
Total revenue $275,000 $202,000 $457,800 $457,800
Cost of Sales $162,000 $128,000 1.a $10,000 $7,000 7.a $293,000 $293,000
Other Expenses $53,000 $31,000 1.e $4,000 $88,000 $88,000
Profit from Trading $60,000 $43,000 $76,800 $76,800
Gain/(Losses) on Sale of Non-Current Assets $10,000 $5,000 1.b,8.a $25,000 -$10,000 -$10,000
Profit before Tax $70,000 $48,000 $66,800 $66,800
Income Tax Expense $20,000 $18,000 $19,000
1.a,1.b,1.f
,7.b,8.b $19,000 $19,000
Net Profit for the Period $50,000 $30,000 $47,800 4.a $40 840 7.c,8.c $48,600
Gain on Revaluation of Specialized Plant $5,000 $5,000 4.d 1000 $4,000
Net Comprehensive Income $50,000 $35,000 $52,800 $52,600
Adjustments NCI

7CONTEMPORARY FINANCIAL ACCOUNTING
Bibliography:
Deegan, C. (2013). Financial accounting theory. McGraw-Hill Education Australia.
Williams, J. (2014). Financial accounting. McGraw-Hill Higher Education