CQU ACCT20073: Term 2 2019 Company Accounting Consolidation Project

This project report delves into the intricacies of company accounting consolidation, focusing on the consolidation process for wholly owned entities. The report is structured into three parts: Part A analyzes the acquisition of a subsidiary, including fair value adjustments and the calculation of goodwill; Part B presents the consolidation worksheet entries at a specific date, detailing the adjustments required for business combination valuation and pre-acquisition entries; and Part C provides a consolidated worksheet, summarizing the financial performance and position of the combined entities. The report includes references to key accounting standards and textbooks, offering a comprehensive understanding of the consolidation process. The report covers topics from acquisition analysis to the preparation of consolidated financial statements.

Running Head: Company Accounting
1
Project Report: Company Accounting

Company Accounting
2
Contents
Part A................................................................................................................................3
Part B................................................................................................................................3
Part C................................................................................................................................4
References.........................................................................................................................6

Company Accounting
3
Part A:
Acquisition Analysis at 1July 2017:
Share Capital $ 13,000
General Reserve $ 5,000
Retained Earnings $ 4,050
Book Value of total assets $ 22,050
Add: Fair Value Adjustments:
Plant $ 1,000
Land $ 2,000
Inventories $ 800 $ 3,800
Add: Unrecorded assets and liabilities:
Brand Value $ 1,200
Unrecorded Liabilities -$ 1,500 -$ 300
Fair Value of Net Identifiable Assets $ 25,550
Less: Purchase Consideration Transferred $ 24,600
Gain on Acquisition $ 950
Goodwill appearing in the books $ 500
Net Gain $ 450
(Hoyle, Schaefer & Doupnik, 2015)
Part B:
Consolidation Worksheet Entries at 30 June 2019:
Explanations Debit Credit
Share Capital $ 13,000
General Reserve 01/07/2017 $ 5,000
Retained Earnings 01/07/2017 $ 4,050
Business Combination Valuation
Reserve $ 22,050
Plant $ 1,000
Land $ 2,000
Inventories $ 800
Brand Value $ 1,200
Unrecorded Liabilities $ 1,500
Business Combination Valuation
Reserve $ 3,500
Business Combination Valuation
Reserve $ 25,550
Purchase Consideration Transferred $ 24,600
Goodwill $ 500

Company Accounting
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Gain $ 450
General Reserve $ 3,500
Retained Earnings 01/07/2017 $ 3,500
Gain (1600-1500) $ 100
Unrecorded Liabilities $ 100
(Robinson, Henry, Pirie & Broihahn, 2015)
Part C:
Consolidation
Worksheet:
‘X’ Limited ‘Y’ limited Debit Credit Consolidate
d Balance
Revenues $ 13,000 $ 6,400 $ 19,400
Expenses -$ 7,000 -$ 4,200 -$ 11,200
Trading profit $ 6,000 $ 2,200 $ 8,200
Gains (losses) on
sale of non-
current assets
$ 3,000 $ 800
$ 3,800
Profit before tax $ 9,000 $ 3,000 $ 12,000
Income tax
expense
-$ 2,000 -$ 500
-$ 2,500
Profit for the
period
$ 7,000 $ 2,500
$ 9,500
Retained Earnings
(1/7/18)
$ 33,300 $ 5,500
$ 6,050 $ 32,750
Transfer from
General reserve
$ 3,000 $ 1,500
$ 1,500 $ 3,000
$ 43,300 $ 9,500 $ 45,250
Dividend paid -$ 2,000 $ - -$ 2,000
Retained earnings
(30/6/19)
$ 41,300 $ 9,500
$ 43,250
Share capital $ 15,000 $ 13,000 $ 13,000 $ 15,000
General reserve $ 1,000 $ 2,000 $ 5,000 $ 3,500 $ 1,500
Other component
of Equity
$ 2,500 $ 1,800
$ 4,300
Gain $ 450 $ 450
Total Equity $ 59,800 $ 26,300 $ 64,500
Accounts payable $ 4,000 $ 1,000 $ 5,000
Deferred tax $ 1,800 $ 1,000 $ 2,800

Company Accounting
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liability
Other non-current
liabilities
$ 24,800 $ 23,000
$ 47,800
Unrecorded
Liabilities $ 1,600 $ 1,600
Total liabilities $ 30,600 $ 25,000 $ 55,600
Total Equity and
liabilities
$ 90,400 $ 51,300
$ 120,100
Plant $ 43,000 $ 38,800 $ 1,000 $ 82,800
Accumulated
Depreciation-
Plant
-$ 18,200 -$ 22,000
-$ 40,200
Land $ 15,000 $ 20,000 $ 2,000 $ 37,000
Brands $ 8,000 $ - $ 1,200 $ 9,200
Shares in ‘Y’
limited
$ 24,600 $ -
$ 24,600
Financial Assets $ 11,000 $ 10,500 $ 21,500
Cash $ 1,000 $ 500
Inventories $ 4,000 $ 3,000 $ 800 $ 7,800
Goodwill $ 2,000 $ 1,800 $ 1,800 $ 2,000
Accumulated
Impairment
Losses
$ - -$ 1,300
$ 1,300 $ -
Total Assets $ 90,400 $ 51,300 $ 120,100

Company Accounting
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References:
Robinson, T.R., Henry, E., Pirie, W.L. & Broihahn, M.A. (2015). International financial
statement analysis. New York: John Wiley & Sons.
Hoyle, J.B., Schaefer, T. & Doupnik, T., (2015). Advanced accounting. McGraw Hill.