ACC705 Corporate Accounting: Analysis and Consolidation Project

This assignment provides a comprehensive solution to a corporate accounting problem involving the consolidation of financial statements following an acquisition. It includes a detailed acquisition analysis, consolidation journal entries, an income statement, and a balance sheet for the consolidated entity. The assignment addresses fair value adjustments, intercompany transactions, and the calculation of goodwill. Journal entries cover business combination valuation, pre-acquisition adjustments, sales and profit in closing inventory, profit in opening inventory, and sales of plant and inventory. The consolidation worksheet presents the adjustments necessary to combine the financial statements of the parent and subsidiary, ensuring accurate reporting of the consolidated entity's financial position and performance. Desklib offers many resources, including solved assignments and past papers, to aid students in their studies.

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

1CORPORATE ACCOUNTING
Table of Contents
Requirement 1:.................................................................................................................................2
Requirement 2:.................................................................................................................................3
Requirement 3:.................................................................................................................................6
Bibliography:...................................................................................................................................9

2CORPORATE ACCOUNTING
Requirement 1:
Particulars
Carrying
Amount
Fair
Value Tax Rate
Net Fair
Value
Share Capital $66,000 $66,000
Retained Earnings $6,000 $6,000
Plant $1,20,000 $1,23,000 30% $2,100
Patents $90,000 $1,05,000 30% $10,500
Inventory $18,000 $22,500 30% $3,150
Net Fair Value of Identifiable
Assets & Liabilities $87,750
Purchase Consideration:
Cash $30,000
Shares- 20,000 shares @ Rs.3
per share $60,000
Total Purchase Consideration $90,000
Goodwill $2,250
Acquisition Analysis:

3CORPORATE ACCOUNTING
Requirement 2:

4CORPORATE ACCOUNTING
Dr. Cr.
Date Amount Amount
1 Business Combination Valuation Entries:
1.a Accumulated Depreciation A/c. 30000
Plant A/c. $27,000
Deferred Tax Liability A/c. $900
Business Combination Valuation
Reserve A/c. $2,100
1.b Depreciation Expense A/c. 600
Retained Earnings A/c. (1/7/16) 600
Accumulated Depreciation A/c. 1200
1.c Deferred Tax Liability A/c. 360
Income Tax Expense A/c. 180
Retained Earnings A/c. (1/7/16) 180
1.d Goodwill A/c. $2,250
Business Combination Valuation
Reserve A/c. $2,250
2 Pre-Acquisition Entries:
At 1/7/15:
2.a Share Capital A/c. $66,000
Retained Earnings A/c. (1/7/15) $6,000
Business Combination Valuation
Reserve A/c. $18,000
Shares in Brim Ltd. A/c. $90,000
At 30/6/17:
2.b Share Capital A/c. $66,000
Retained Earnings A/c. (1/7/16) 19650
Business Combination Valuation
Reserve A/c. $4,350
Shares in Brim Ltd. A/c. $90,000
Particulars
In the books of Tuna Ltd.
Consolidation Journal Entries

5CORPORATE ACCOUNTING
3 Sales & Profit in Closing Inventory:
3.a Sales Revenue A/c. 21000
Cost of Sales A/c. 21000
3.b Sales Revenue A/c. 4500
Cost of Sales A/c. 4200
Inventory A/c. 300
3.c Deferred Tax Asset A/c. 90
Income Tax Expense A/c. 90
4 Profit in Opening Inventory of Brim Ltd.:
Retained Earnings A/c. (1/7/16) 420
Income Tax Expenses A/c. 180
Cost of Sales A/c. 600
5 Sale of Plant in Current Period:
5.a Proceeds on Sale of Plant A/c. 15000
Carrying Amount of Plant Sold A/c. 14000
Plant A/c. 1000
5.b Deferred Tax Assets A/c. 300
Income Tax Expense A/c. 300
5.c Accumulated Depreciation A/c. 100
Depreciation Expense A/c. 100
5.d Income Tax Expense A/c. 30
Deferred Tax Assets A/c. 30

6CORPORATE ACCOUNTING
6 Sale of Inventory classified as Plant in earlier period:
6.a Retained Earnings A/c. (1/7/16) 1400
Deferred Tax Assets A/c. 600
Plant A/c. 2000
6.b Accumulated Depreciation A/c. 600
Depreciation Expense A/c. 400
Retained Earnings A/c. (1/7/16) 200
6.c Income Tax Expense A/c. 120
Retained Earnings A/c. (1/7/16) 60
Deferred Tax Assets A/c. 180
7 Sale of Plant classified as Inventory in Current Period:
7.a Proceeds on Sale of Plant A/c. 9000
Carrying Amount of Plant Sold A/c. 7500
Cost of Sales A/c. 1500

7CORPORATE ACCOUNTING
Requirement 3:
Particulars Amount
Sales Revenue $1,17,000
Cost of Sales -$49,950
Gross Profit $67,050
Operating Expenses:
Trading Expenses -$13,800
Offi ce Expenses -$12,000
Depreciation -$5,800
Net Operating Profit before Tax $35,450
Tax Expenses -$18,160
Net Profit After Tax $17,290
In the books of Tuna Ltd.
Income Statement
for the year ended 30 June 2017

8CORPORATE ACCOUNTING
Particulars Amount
Current Assets:
Inventory $52,800
Receivables $20,700
TOTAL CURRENT ASSETS $73,500
Non-Current Assets:
Plant $1,34,250
Accumulated Depreciation -$22,250
Intangibles $23,100
Deferred Tax Assets $18,330
Goodwill $2,250
TOTAL NON-CURRENT ASSETS $1,55,680
TOTAL ASSETS $2,29,180
Current Liabilities:
Current Liabilities $31,600
TOTAL CURRENT LIABILITIES $31,600
Non-Current Liabilities:
Deferred Tax Liabilities $26,540
TOTAL NON-CURRENT LIABILITIES $26,540
TOTAL LIABILITIES $58,140
Equity:
Share Capital $96,000
Retained Earnings $75,040
TOTAL EQUITY $1,71,040
TOTAL LIABILITIES & EQUITY $2,29,180
In the books of Tuna Ltd.
Balance Sheet
as at 30 June 2017

9CORPORATE ACCOUNTING
Particulars Tuna Ltd. Brim Ltd.
Journal
Nos. Dr. Cr.
Journal
Nos. Group
Sales Revenue $64,500 $78,000 3.a,3.b $25,500 $1,17,000
Cost of Sales $30,900 $46,350 $27,300
3.a,3.b,
4,7.a $49,950
Gross Profit $33,600 $31,650 $67,050
Trading Expenses $4,800 $9,000 $13,800
Offi ce Expenses $7,950 $4,050 $12,000
Depreciation $1,800 $3,900 1.b $600 $500 5.c,6.b $5,800
$14,550 $16,950 $31,600
Profit from Trading $19,050 $14,700 $35,450
Proceeds from Sale of Plant $9,000 $15,000 5.a,7.a $24,000 $0
Carrying Amount of Plant Sold $7,500 $14,000 $21,500 5.a,7.a $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.d,6.
c $330 $570
1.c,3.c,5
.b $18,160
Profit $9,450 $8,400 $17,290
Reatined Earnings (1/7/16) $48,000 $31,500
1.b,2.b,
4,6.a,6.
c $22,130 $380 1.c,6.b $57,750
Retained Earnings (30/6/17) $57,450 $39,900 $75,040
Share Capital $96,000 $66,000 2.b $66,000 $96,000
BCVR 2.b $4,350 $4,350 1.a,1.d $0
Total Equity $1,53,450 $1,05,900 $1,71,040
Current Liabilities $21,100 $10,500 $31,600
Deferred Tax Liability $11,000 $15,000 1.c $360 $900 1.a $26,540
Total Liabilities $32,100 $25,500 $58,140
Total Equities & Liabilities $1,85,550 $1,31,400 $2,29,180
Plant $57,000 $1,07,250 $30,000
1.a,5.a,6
.a $1,34,250
Accumulated Depreciation -$18,300 -$33,450
1.a,5.c,
6.b $30,700 $1,200 1.b -$22,250
Intangibles $12,000 $11,100 $23,100
Shares in Brim Ltd. $90,000 $90,000 2.b $0
Deferred Tax Asset $8,100 $9,450
3.c,5.b,
6.a $990 $210 5.d,6.c $18,330
Inventory $28,500 $24,600 $300 3.b $52,800
Receivables $8,250 $12,450 $20,700
Goodwill $0 $0
Total Assets $1,85,550 $1,31,400 $2,29,180
Adjustments
Consolidation Worksheet:

10CORPORATE ACCOUNTING
Bibliography:
Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial accounting.
Pearson Higher Education AU.
Schipper, K., Francis, J. and Weil, R., 2017. Financial Accounting: Introduction to Concepts,
Methods and Uses. Cengage Learning.
Scott, W.R., 2015. Financial accounting theory (Vol. 2, No. 0, p. 0). Prentice Hall.
Trotman, K., Carson, E. and Gibbins, M., 2015. Financial accounting: an integrated approach.
Cengage Australia.
Warren, C.S. and Jones, J., 2018. Corporate financial accounting. Cengage Learning
Williams, J., 2014. Financial accounting. McGraw-Hill Higher Education