ACC705 Corporate Accounting Report: Griffin Ltd and Frank Ltd

This report delves into the corporate accounting practices of Griffin Ltd following its acquisition of Frank Ltd. It begins with an acquisition analysis, detailing the goodwill calculation and the impact of the acquisition on the financial statements. The report then provides adjusting journal entries, including those for depreciation, gain on sale of plant, and various business combination valuation reserves (BCVR). A consolidated worksheet is presented, outlining the financial statements of both companies and the adjustments made during consolidation. Finally, consolidated financial statements are provided, including a statement of profit and loss, a statement of changes in equity, and a statement of financial position. These statements reflect the combined financial performance and position of Griffin Ltd and Frank Ltd after the acquisition, demonstrating the application of accounting standards in a corporate setting. The report also references relevant accounting standards and literature to support the analysis.

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
Adjusting journal entries:................................................................................................................3
Consolidated Worksheet:.................................................................................................................5
Consolidated financial statements:..................................................................................................7
References and Bibliography:........................................................................................................10

2CORPORATE ACCOUNTING
Acquisition analysis:

3CORPORATE ACCOUNTING
The calculation in the above table directly provides information about the goodwill
calculation that has been generated from the acquisition process. The overall goodwill of 24,800
has been generated after deducting the fair value of assets with the acquisition amount
(Legislation.gov.au 2019).
Adjusting journal entries:
1. Acquisition analysis:
Particulars Dr Cr
Depreciation Expense $ 600
Gain on Sale of Plant $ 3,600
Income tax expense $ 1,080

4CORPORATE ACCOUNTING
Retained Earnings (1/7/18) $ 1,680
Transfer from BCVR $ 4,200
(Adjustments for depreciation and Plant to the date of sale)
Particulars Dr Cr
Brands $ 12,000
Deferred Tax Liability $ 3,600
BCVR $ 8,400
Transfer from BCVR $ 7000
Income Tax Expense $ 3,000
Gain on Guarantee $ 7,500
Guarantee Expense $ 2500
Particulars Dr Cr
Goodwill $ 24,800
Business Combination Valuation Reserve $ 24,800
2. Journal Entries:
Particulars Dr Cr
Retained earnings (1/7/18) $ 50,000
Share capital $ 200,000
General reserve $ 20,000
Business combination valuation reserves $ 50,000
Shares in Frank Ltd. $ 320,000
Particulars Dr Cr
Retained earnings (1/7/19) $ 56,000
Share capital $
200,000
General reserve $ 33,000

5CORPORATE ACCOUNTING
Business combination valuation reserves $30,400
Shares in Frank Ltd. $ 320,000
$5,600 (BCVR-Inventories) - $13,000 (General
reserve) + $50,000 + $14,000 (BCVR-Land)
Transfer from BCVR $ 4,200
Business combination valuation reserves $ 4,200
(Sale of Plant)
Business combination valuation reserves $ 7,000
Transfer from BCVR $ 7,000
(Settlement of Loan)
General Reserve $ 15,000
Transfer from General Reserve $ 15,000
The above tables provide information about the journal entries that has been used for pre-
acquisition calculation and BCVR calculation. Both the calculations are mainly conducted to
find the relevant calculations and adjustment that is needed for might the consolidated worksheet
of the organisation (Legislation.gov.au 2019).
Consolidated Worksheet:
Financial Statements Griffin
Ltd
Frank
Ltd
Adjustments Group
Dr Cr
Sales revenue 190 000 110 000 7 500 1 307 500

6CORPORATE ACCOUNTING
Expenses 80 000 76 000 1 600 2 500 1 154 100
110 000 34 000 153 400
Gain on Sale of Non-current assets 5 000 4 000 1 3 000 6 000
Profit before Tax 115 000 38 000 159 400
Tax Expense 40 000 6 000 1 3 000 1 080 1 47 920
Profit for the year 75 000 32 000 111 480
Retained Earnings (1/7/18) 80 000 88 000 1
2
1 680
56 600
109 720
Transfer from BCVR 0 0 1
2
7 000
4 200
4 200
7 000
1
2
0
155 000 120
000
221 200
Dividend Paid 34 000 0 34 000
Transfer to General Reserve 0 15 000 15 000 2 0
34 000 15 000 34 000
Retained Earnings (30/6/19) 121 000 105 000 187 200
Share Capital 280 000 200 000 2 200
000
280 000
General Reserve 20 000 48 000 2
2
33 000
15 000
20 000
BCVR Entries 0 0 2
2
30 400
7 000
8 400
24 800
4 200
1
1
2
0

7CORPORATE ACCOUNTING
421 000 353 000 487 200
Asset Revaluation Surplus
(1/7/18)
12 000 12000
Gain on revaluation 12 000 12 000
Asset Revaluation Surplus
(30/06/19)
24 000 24 000
445 000 353 000 511 200
Provisions 15 000 12 000 27 000
Payables 40 000 8 000 48 000
Deferred tax liabilities 0 0 3 600 1 3 600
500 000 373 000 598 800
Shares in Frank Ltd 320 000 0 320
000
2 0
Cash 12 000 30 000 42 000
Accounts receivable 28 000 12 000 40 000
Inventories 30 000 51 000 81 000
Plant 230 000 320 000 550 000
Accumulated Depreciation - Plant (120
000)
(40 000) (160
000)
Goodwill 0 0 1 24 800 24 800
Brands 0 0 1 12 000 12 000
500 000 373 000 398
280
398
280
589 800
Consolidated financial statements:
Griffin LTD

8CORPORATE ACCOUNTING
Consolidated Statement of Profit & Loss as at 30 June
2019
Particulars Amount
Sales revenue $ 307,500
Expenses $ 154,100
Operating Profit $ 153,400
Profit on Non-Current Assets $ 6,000
Profit before Tax $ 159,400
Income Tax Expenses $ 47,920
Net Profit before tax $ 111,480
Gain on revaluation of assets $ 12,000
Comprehensive income for the period $ 123,480
Griffin LTD Consolidated Statement of changes in
Equity as at 30 June 2019
Comprehensive income for the period $ 123,480
Retained Earnings (1/7/18) $ 109,720
Profit for the period $ 111,480
Dividend paid $ (34,000)
Retained Earnings (30/6/19) $ 187,200
Share capital balance at 1 July 2018 $ 280,000
Share capital balance at 30 June 2019 $ 280,000
General reserve at 1 July 2018 $ 20,000
General reserve at 30 June 2019 $ 20,000
Asset Revaluation Surplus (30/6/19) $ 12,000
Gains on revaluation $ 12,000
Asset Revaluation Surplus (30/6/19) $ 24,000
Griffin LTD Consolidated Statement of Financial
Position as at 30 June 2019
Particulars Amount
Current Assets:
Cash $ 42,000
Inventories $ 81,000
Accounts receivables $ 40,000

9CORPORATE ACCOUNTING
Total Current Assets $ 163,000
Non-Current Assets:
Plant $ 550,000
Accum. Depreciation $ (160,000)
Land $ 12,000
Shares in Frank Ltd $ -
Goodwill $ 24,800
Total Non-Current Assets $ 426,800
Total Assets $ 589,800
Current Liabilities:
Provisions $ 27,000
Payables $ 48,000
Total Current Liabilities $ 75,000
Non-Current Liabilities:
Defer.tax liabilities $ 3,600
Total Non-Current Liabilities $ 3,600
Total Liabilities $ 78,600
Equity:
Share Capital $ 280,000
Asset Revaluation Surplus $ 44,000
Retained Earnings $ 187,200
Total Equity $ 511,200
Total Liabilities and Equity $ 589,800

10CORPORATE ACCOUNTING
References and Bibliography:
Aasb.gov.au. 2019. [online] Available at:
https://www.aasb.gov.au/admin/file/content105/c9/AASB101_07-15.pdf [Accessed 24 May
2019].
Cpaaustralia.com.au. 2019. [online] Available at:
https://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/professional-resources/
ifrs-factsheets/factsheet-ias1-presentation-of-financial-statements.pdf?la=en [Accessed 24 May
2019].
Legislation.gov.au. 2019. AASB 10 - Consolidated Financial Statements - July 2015 . [online]
Available at: https://www.legislation.gov.au/Details/F2018C00317 [Accessed 16 May 2019].
Legislation.gov.au. 2019. AASB 127 - Consolidated and Separate Financial Statements - March
2008 . [online] Available at: https://www.legislation.gov.au/Details/F2011C00949 [Accessed 16
May 2019].