Corporate Accounting Consolidation: Worksheet, Entries, and Analysis

This document presents a comprehensive solution to a corporate accounting consolidation assignment. It begins with a detailed acquisition analysis, including the fair value of identifiable net assets, share capital, and the calculation of goodwill. The solution provides a series of consolidation journal entries to eliminate intercompany transactions, unrealized profits in inventory, intra-group dividends, and interest amounts. Part (b) of the solution includes a correct consolidated worksheet, the calculation of the non-controlling interest (NCI), and the consolidated financial statements, including the consolidated statement of comprehensive income and the consolidated statement of financial position. The solution also provides detailed working notes, including calculations for sales consolidation, inventory valuation, retained earnings, interim and proposed dividends, share capital, and unsecured notes, ensuring a thorough understanding of the consolidation process.

Corporate
Accounting

Table of Contents
MAIN BODY...................................................................................................................................3
Part (a)..........................................................................................................................................3
Part (b).........................................................................................................................................4

MAIN BODY
Part (a)
Correct acquisition analysis :
Particulars $
Fair value of identifiable net assets 150000 Share Capital
8000
Retained
Earning
158000
Fair Value purchased (75% x $158000) 118500
Purchase Consideration 126000
Goodwill 7500
Consolidation Journal Entries:
Debit Credit
$ $
(1) Elimination of investment in Robin Ltd
Retained Earning Dr. 6000
Share Capital (150000*75%) Dr. 112500
Goodwill Dr. 7500
Shares in Weiser Ltd 126000
(2) Goodwill impairment
Operating expenses(Goodwill Impairment loss) Dr. 1500
Accumulated impairment losses 1500
(3) Elimination of inter-company sales of inventory sales

Sales Dr. 20000
Purchases 20000
($35000-$15000)
(4) Elimination of unrealised profit in closing inventory
Closing Inventory(income statement) Dr. 500
Inventory(balance sheet) 500
[1000- (2500-2000)]
Deferred tax asset (500x30%) Dr. 150
Income Tax Expense 150
(5) Elimination of intra-group 10% Unsecured notes:
10% Unsecured notes (Liability) Dr. 10000
10% Unsecured notes in Bud Ltd 10000
(6) Elimination of proposed and interim intra group dividends:
Dividend Payable[22500 x75%] Dr. 16875
Proposed Dividend 16875
Dividend payable Dr. 7125
Interim Dividend 7125
(6)Elimination of intra-group interest amount:
Interest(Liability) Dr. 1000
Interest(Asset) 1000

Part (b)
Correct consolidated worksheet and NCI amount :
Eliminations
Account Bud Ltd
Weiser
Ltd Debit Credit
Consolid
ations
$ $ $ $ $
Sales 440000 220000 35000 15000 640000
Cost of Sales 200000 108000
Purchase 15000 35000
Inventory 500
287500
Gross Profit 240000 112000 352500
Dividend from Weiser Ltd 7125 7125
Interest from Bud Ltd 1000 1000 -
247125 113000 359625
Marketing Expenses 53000 26000 79000
Administration Expenses 56425 25000 81425
Finance Expenses 7500 3000 10500
Other operating expenses 1500 1500
Total Operating Expenses' 116925 54000 172425
Operating Profit before tax 130200 59000 187200
Income Tax Expenses 59500 24000 150 83350
Operating Profit before tax 70700 35000 103850
Retained Earning 1 July 24000 19000 6000 37000

94700 54000 140850
Interim Dividend 8000 9500 7125 10375
Proposed Dividend 45000 22500 16875 50625
53000 32000 61000
Retained Earning 41700 22000 70850
Share Capital 300000 150000 112500 337500
General Reserve 38000 10000 48000
10% Unsecured Loan 50000 1000 49000
Dividend payable 45000 22500 24000 43500
Current Tax Liability 60000 24000 84000
Other current liabilities 59600 38900 98500
594300 267400 731350
Shares in Weiser Ltd 126000 126000 0
10% Unsecured notes 10000 10000 0
Other non-current assets 325600 180000 505600
Inventory 32000 22000 500 53500
Other current assets 110700 55400 166100
Deferred tax asset (500x30%) 150 150
Goodwill 7500 7500
Accumulated impairment losses 1500 -1500
594300 267400 731350
Working Note*
1. Calculation of sales consolidation :
Total sales = 660000

Less: Debit = 35000
Add: Credit = 15000
640000
2. Calculation of inventory :
Closing inventory – Inventory balance
1000- (2500-2000)
500
3. Calculation of retained earning at July 1 :
Particulars Amount
Total retained earnings (24000+19000)
Less : 75% of retained earning of 8000 on 1st of July
43000
6000
Retained earnings 37000
4. Calculation of interim dividend :
Particulars Amount
Total interim Dividend (8000+9500)
Less : 75 % of dividend of Weiser limited
17500
7125
Interim dividend 10375
5. Calculation of Proposed dividend :
Particulars Amount
Total proposed Dividend (45000+22500)
Less : 75 % of dividend of Weiser limited
67500
16875
Proposed dividend 50625

6. Calculation of share capital :
Particulars Amount
Total share capital (300000+150000)
Less : 75 % of capital of Bud limited
450000
112500
Share capital 337500
7. Calculation of 10 % unsecured notes :
10% unsecured notes = 50000
Less- 10% of 10000 (in Bud limited) = 1000
49000
Consolidated Statement of comprehensive income :
Particulars Amount (in $)
Sales 640000
Cost of Sales 287500
Gross Profit 352500
Dividend from Weiser Ltd 7125
Interest from Bud Ltd -
359625
Marketing Expenses 79000
Administration Expenses 81425
Finance Expenses 10500
Other operating expenses 1500
Total Operating Expenses' 172425
Operating Profit before tax 187200
Income Tax Expenses 83350

Operating Profit before tax 103850
Retained Earning 1 July 37000
140850
Interim Dividend 10375
Proposed Dividend 50625
61000
Consolidated Statement of financial position :
$
Shareholder's Fund
Retained Earning 70850
Share Capital 337500
General Reserve 48000
Non-current Liabilities
10% Unsecured Loan 49000
Current Liabilities
Dividend payable 43500
Current Tax Liability 84000
Other current liabilities 98500
Total 731350
Non-current Assets
Goodwill 7500