Corporate Accounting and Reporting: Fluffy Ltd Financial Statements

This report provides a detailed analysis of the corporate accounting and financial reporting of Fluffy Ltd. It begins with an acquisition analysis, calculating goodwill and the fair value of assets and liabilities following the acquisition of Gilder Ltd. The report includes comprehensive journal entries related to the business combination valuation, pre-acquisition, and subsequent transactions, such as sales and depreciation. Worksheet entries are presented to consolidate the financial data of Fluffy Ltd and Gilder Ltd, followed by the consolidated financial statements, including the income statement and balance sheet. The financial statements present the consolidated figures for sales revenue, cost of sales, profit, assets, liabilities, and equity. The report concludes with a bibliography of cited sources.

Running head: CORPORATE ACCOUNTING AND REPORTING
Corporate Accounting and Reporting
Name of the Student:
Name of the University:
Author Note

1CORPORATE ACCOUNTING AND REPORTING
Table of Contents
Preparing the Consolidated worksheet and consolidated financial statement of Fluffy Ltd at
30 June 2017..............................................................................................................................2
Acquisition Analysis:.................................................................................................................2
Journal Entries:...........................................................................................................................3
Worksheet Entries:.....................................................................................................................5
Consolidated financial statement of Fluffy Ltd at 30 June 2017:..............................................6
Bibliography:..............................................................................................................................8

2CORPORATE ACCOUNTING AND REPORTING
Preparing the Consolidated worksheet and consolidated financial statement of Fluffy
Ltd at 30 June 2017
Acquisition Analysis:
Particulars Amount
Share Capital $66,000.00
Retained Earnings $6,000.00
Equity $72,000.00
Particulars
Carrying
amount Fair value Benefit
Benefit after
tax
Plant $120,000.00
$123,000.0
0 $3,000.00 $2,100.00
Patents $90,000.00
$105,000.0
0 $15,000.00 $10,500.00
Inventory $18,000.00 $22,500.00 $4,500.00 $3,150.00
Net Fair value of identifiable assets and liabilities = $66,000.00 + $6,000.00 (equity)
= $4,500 (1-30%) (Inventory)
= $15,000 (1-30%) (Patent)
= $3,000 (1-30%) (Plant)
= $87,750
Consideration transferred = $90,000
Goodwill = $2,250
The information in the above table provides calculation for the acquisition analysis
that is conducted for Fluffy Ltd. From the overall valuation, it has been detected that the
consideration paid to Gilder Ltd is relevantly more than its fair value. Thus, the overall
goodwill that is paid by Fluffy Ltd for acquiring the shares of Gilder Ltd is at the levels of

3CORPORATE ACCOUNTING AND REPORTING
$2,250. The valuation of the assets and equity is mainly conducted to determine the benefit
that would be conducted to Fluffy Ltd after the overall acquisition process.
Journal Entries:
1) Business Combination Valuation Entries (BCVR)
Particulars Amount Amount
Accumulated depreciation…..........Dr $30,000.00
BCVR $2,100.00
Deferred tax liability $900.00
Plant $27,000.00
Depreciation…...................Dr $600.00
Retained earnings (1/7/16)…............Dr $600.00
Accumulated depreciation $1,200.00
Deferred tax liability…..........Dr $360.00
Income tax expense $180.00
Retained earnings (1/7/16) $180.00
Goodwill…...................Dr $2,250.00
BCVR $2,250.00
2) Pre-acquisition entries
Particulars Amount Amount
Retained earnings (1/7/15)…............Dr $6,000.00
Share capital….................Dr $66,000.00
BCVR…........................Dr $18,000.00
Shares in Gilder Ltd $90,000.00
Retained earnings (1/7/16)…............Dr $19,650.00
Share capital….................Dr $66,000.00
BCVR…........................Dr $4,350.00
Shares in Gilder Ltd $90,000.00
3) Particulars Amount Amount
Sales revenue…..................Dr 21000
Cost of sales 21000
Sales revenue…..................Dr 4500

4CORPORATE ACCOUNTING AND REPORTING
Cost of sales 4200
Inventory 300
Deferred tax asset…...............Dr 90
Income tax expense 90
4) Particulars Amount Amount
Retained earnings (1/7/16)…............Dr $420.00
Income tax expense…............Dr $180.00
Cost of sales $600.00
5) Particulars Amount Amount
Sale of plant….................Dr $15,000.00
Carrying amount $14,000.00
Plant $1,000.00
Deferred tax asset…...............Dr $300.00
Income tax expense $300.00
Accumulated depreciation…..........Dr $100.00
Depreciation $100.00
Income tax expense…............Dr $30.00
Deferred tax asset $30.00
6) Particulars Amount Amount
Retained earnings (1/7/16)…............Dr $1,400.00
Deferred tax asset…...............Dr $600.00
Plant $2,000.00
Accumulated depreciation…..........Dr $1,000.00
Depreciation $400.00
Retained earnings (1/7/16) $600.00
Income tax expense…............Dr $120.00
Retained earnings (1/7/16)…............Dr $180.00
Deferred tax asset $300.00
7) Particulars Amount Amount
Sale of plant…...................Dr $9,000.00
Carrying amount $7,500.00
Cost of sales $1,500.00

5CORPORATE ACCOUNTING AND REPORTING
The journal entry that is used in the above tables directly presents the overall
additional information that is presented to Fluffy Ltd for Glider Ltd. This information would
eventually help in depicting the adjusting entries that is used for constructing the consolidated
worksheet for Fluffy Ltd.
Worksheet Entries:
Particulars Fluffy Ltd Glider Ltd
Adjustments
Dr Cr Group
Sales revenue $64,500 $78,000 3) $25,500 $1,17,000
Cost of sales $30,900 $46,350 $27,300 3)4)7) $49,950
Gross profit $33,600 $31,650 $67,050
Trading expenses $4,800 $9,000 $13,800
Office expenses $7,950 $4,050 $12,000
Depreciation $1,800 $3,900 1) $600 $500 5)6) $5,800
Profit from trading $19,050 $14,700 $35,450
Proceeds from sale of plant $9,000 $15,000 5)7) $24,000 $0
Carrying amount of plant sold $7,500 $14,000 $21,500 5)7) $0
Gain/loss on sale of machinery $1,500 $1,000 $0
Profit before Tax $20,550 $15,700 $35,450
Tax Expenses $11,100 $7,300 4)5)6) $330 $570 1)3)5) $18,160
Profit $9,450 $8,400 $17,290
Retained Earnings (1/7/16) $48,000 $31,500 1)2)4)6)6) $22,250 $780 1)6) $58,030
Retained Earnings (30/6/17) $57,450 $39,900 $75,320
Share Capital $96,000 $66,000 2) $66,000 $96,000
BCVR $0 $0 2) $4,350 $4,350 1)1) $0
Total Equity $1,53,450 $1,05,900 $1,71,320
Current liabilities $21,100 $10,500 $31,600
Deferred tax liability $11,000 $15,000 1) $360 $900 1) $26,540
Total Liabilities $32,100 $25,500 $58,140
Total Equity & Liabilities $1,85,550 $1,31,400 $2,29,460
Plant $57,000 $1,07,250 $30,000 1)5)6) $1,34,250
Accumulated depreciation -$18,300 -$33,450 1)5)6) $31,100 $1,200 1) -$21,850
Intangibles $12,000 $11,100 $23,100
Shares in Glider Ltd $90,000 $90,000 2) $0
Deferred tax asset $8,100 $9,450 3)5)6) $990 $330 5)6) $18,210
Inventory $28,500 $24,600 $300 3) $52,800
Receivables $8,250 $12,450 $20,700
Goodwill $0 $0 1) $2,250 $2,250
Total Assets $1,85,550 $1,31,400 $2,29,460

6CORPORATE ACCOUNTING AND REPORTING
The worksheet entries depicted in the above table states about the consolidated values
of Fluffy Ltd for the financial year of 30th June 2017. This worksheet mainly comprises of all
the relevant activities that would depict the correct valuation of Fluffy Ltd after the
acquisition of Gilder Ltd.
Consolidated financial statement of Fluffy Ltd at 30 June 2017:
Consolidated Income Statement:-
Particulars Amount
Sales revenue $117,000.00
Cost of sales $49,950.00
Gross profit $67,050.00
Trading expenses $13,800.00
Office expenses $12,000.00
Depreciation $5,800.00
Profit before Tax $35,450.00
Income Tax Expenses $18,160.00
Net Profit $17,290.00
Consolidated Balance Sheet:
Particulars Amount
Current Assets:
Inventory $52,800.00
Receivables $20,700.00
Total Current Assets $73,500.00
Non-Current Assets:
Plant $134,250.00
Accumulated depreciation -$21,850.00
Intangibles $23,100.00
Deferred tax asset $18,210.00
Goodwill $2,250.00
Total Non-Current Assets $155,960.00
Total Assets $229,460.00
Current Liabilities:
Current liabilities $31,600.00
Deferred tax liability $26,540.00
Total Current Liabilities $58,140.00

7CORPORATE ACCOUNTING AND REPORTING
Non-Current Liabilities:
Total Liabilities $58,140.00
Equity:
Share Capital $96,000.00
Retained Earnings $58,030.00
Net Profit $17,290.00
Total Equity $171,320.00
Total Liabilities and Equity $229,460.00

8CORPORATE ACCOUNTING AND REPORTING
Bibliography:
Bergmann, A., Grossi, G., Rauskala, I. and Fuchs, S., 2016. Consolidation in the public
sector: methods and approaches in Organisation for Economic Co-operation and
Development countries. International Review of Administrative Sciences, 82(4), pp.763-783.
Hoyle, J.B., Schaefer, T. and Doupnik, T., 2015. Advanced accounting. McGraw Hill.