FINANCE Assignment: Consolidation Worksheet and Business Combination

This finance assignment solution addresses the preparation of acquisition analysis and consolidation worksheets. It includes detailed journal entries and ledger entries for business combinations, specifically focusing on Positive Ltd's group for the year ending June 30, 2019. The assignment covers the consolidation of financial statements, including sales, cost of sales, expenses, and other income. It presents adjustments and consolidated entries, demonstrating the process of combining the financial data of parent and subsidiary companies. The solution also incorporates various journal entries for business combinations in the books of Ping Pong Ltd, including entries for goodwill, management expenses, accounts payable, and dividend income. The assignment further provides consolidated ledger entries, adjustments, and calculations to arrive at a final consolidated financial position, including the balance sheet and income statement. The document is designed to help students understand the complexities of financial consolidation and business combinations.

Running head: FINANCE
Finance
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Table of Contents
Question 1:.......................................................................................................................................2
1. Preparing the acquisition analysis:..............................................................................................2
2. Prepare the consolidation worksheet entries for Positive Ltd’s group at 30 June 2019:.............2
3. Prepare the consolidation worksheet for Positive Ltd’s group at 30 June 2019:.........................5
Question 2:.......................................................................................................................................5
1. Preparing the acquisition analysis:..............................................................................................5
2. Prepare the consolidation worksheet entries for the year ending 30 June 2019:.........................6
Bibliography:...................................................................................................................................9

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Question 1:
1. Preparing the acquisition analysis:
2. Prepare the consolidation worksheet entries for Positive Ltd’s group at 30 June 2019:
Journal entries:

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Ledger entries:

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3. Prepare the consolidation worksheet for Positive Ltd’s group at 30 June 2019:
Question 2:
1. Preparing the acquisition analysis:

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2. Prepare the consolidation worksheet entries for the year ending 30 June 2019:
Journal Entries:
Date Partiulars Amount Amount
a 30-06-2019 Goodwill Account......................................................Dr 20,000.00$
To Business Valuation Reserve Account 20,000.00$
Transfering the goodwill to valuation reserve account
b 30-06-2019 Management expenses……………………………..Dr 7,000.00$
To Management revenues 7,000.00$
Management expenses adjusted
c 30-06-2019 Accounts payable......................................Dr 10,000.00$
To Inventory Account 10,000.00$
Transfer for inventory
d 30-06-2019 Interest on unsecured loan……………………………….Dr 3,000.00$
To Unsecured loan 3,000.00$
Interest received on unsecured loan
e 25-01-2019 Dividend Income Account............................................Dr 2,000.00$
To Outstanding Dividend Income Account 2,000.00$
Dividend revenue received
f 30-06-2019 Dividend Income Account............................................Dr 3,000.00$
To Outstanding Dividend Income Account 3,000.00$
Dividend revenue received
Journal Entries for Business Combination
In the Books of Ping Pong Ltd
Partiulars Amount Amount
g Share Capital Account................................................Dr 1,50,000.00$
General Reserve Account...........................................Dr 20,000.00$
Retained Earnings Account........................................Dr 10,000.00$
Business Valuation Reserve Account.........................Dr 20,000.00$
To Shares in Possum Limited Account 2,00,000.00$
Acquisition entry
h Share Capital Account...............................................Dr 20,000.00$
To General Reserve Account 20,000.00$
General reserve account
Journal Entries for Business Combination
In the Books ofPing Pong Ltd

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Ledger:
Consolidated entries:

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Debit Credit Group
Sales 3,40,000 1,40,000 4,80,000$
Cost of sales
Opening inventory at 1 July 2018 20,000 5,000 25,000$
Purchases 2,00,000 73,000 2,73,000$
Closing inventory 30 June 2019 -25,000.00 -15,000 -40,000$
Cost of sales 1,95,000.00 63,000.00 2,58,000$
Gross profit 1,45,000.00 77,000.00 2,22,000$
Depreciation expenses 32,000 23,000 55,000$
Interest expense 9,000 1,000 10,000$
Management fee expense 0 7,000 7,000$
Other expenses 43,000 34,000 77,000$
Total expenses 84,000 65,000 1,49,000$
Gross profit less total expenses 61,000.00 12,000.00 73,000.00
Other income -$
Dividend revenue 5,000 2,000 e,f 5,000.00$ 2,000$
Interest revenue 0 3,000 d 3,000.00$ -$
Management fee revenue 7,000 0 b 7,000.00$ -$
Total other income 12,000 5,000 2,000$
Operating profit before tax 73,000.00 17,000.00 75,000$
Income tax expense 28,000 5,000 33,000$
Operating profit after tax 45,000 12,000 42,000$
Retained earnings 1 July 2018 35,000 5,000 40,000$
Available for appropriation 80,000 17,000 82,000$
Interim dividend paid 10,000 2,000 e 2,000.00$ 10,000$
Final dividend proposed 30,000 3,000 f 3,000.00$ 36,000$
Dividends paid and proposed 40,000 5,000 46,000$
Retained earnings 30 June 2019 40,000 12,000 36,000$
Share capital 4,00,000 1,50,000 g,h 1,70,000.00$ 3,80,000$
General reserve 20,000 30,000 a 20,000.00$ 70,000$
Accounts payable 40,000 20,000 c 10,000.00$ 50,000$
Dividend payable 30,000 0 f 3,000.00$ 27,000$
12% unsecured notes 50,000 0 50,000$
Other liabilities 16,000 15,000 31,000$
Total liabilities 5,96,000 2,27,000 6,44,000$
Assets
Accounts receivable 50,000 26,000 76,000$
Inventory 25,000 15,000 40,000$
Dividend receivable 3,000 0 3,000$
Unsecured notes – Ping Pong Ltd 0 25,000 25,000$
Investment in Sing Song Ltd 2,00,000 0 g 2,00,000.00$ -$
Other assets 3,18,000 1,62,000 4,80,000$
Goodwill a 20,000.00 20,000$
Total assets 5,96,000 2,28,000 6,44,000$
Particulars Ping Pong Ltd Sing Song Ltd
Adjustments
Rf

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Bibliography:
Florou, A., Kosi, U. and Pope, P.F., 2017. Are international accounting standards more credit
relevant than domestic standards?. Accounting and Business Research, 47(1), pp.1-29.
Hoyle, J.B., Schaefer, T. and Doupnik, T., 2015. Advanced accounting. McGraw Hill.
Loftus, J., Leo, K., Boys, N., Daniliuc, S., Boys, N., Luke, B., Ang, H.N., & Byrnes, K. 2018.
Financial Reporting. (2nd edition). Brisbane: John Wiley & Sons Ltd.