University Financial Accounting Assignment: Consolidation and Analysis

This document presents a comprehensive solution to a financial accounting assignment focusing on consolidation principles and accounting requirements. The assignment includes detailed analyses of acquisitions, specifically examining Smart Ltd and Positive Ltd. It involves preparing worksheet entries and consolidated financial statements, including balance sheets and income statements. The solution also addresses the complexities of intercompany transactions, such as the sale of inventory and plant assets, and their impact on consolidated figures. Furthermore, the assignment explores the consolidation of Ping Pong Ltd and Sing Song Ltd, covering similar aspects of worksheet entries, sales, cost of sales, and other expenses. The solution provides a step-by-step approach to ensure accurate financial reporting and compliance with accounting standards.

Running head: FINANCIAL ACCOUNTING
Financial Accounting
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1FINANCIAL ACCOUNTING
Table of Contents
Question 1:.......................................................................................................................................2
1. Acquisition analysis of Smart Ltd:..............................................................................................2
2. Worksheet entries for Positive Ltd’s group:................................................................................3
3. Worksheet for Positive Ltd:.........................................................................................................4
Question 2:.......................................................................................................................................6
1. Acquisition analysis:....................................................................................................................6
2. Worksheet entries in the books of Ping Pong Ltd:......................................................................7
Bibliography:.................................................................................................................................10

2FINANCIAL ACCOUNTING
Question 1:
1. Acquisition analysis of Smart Ltd:

3FINANCIAL ACCOUNTING
2. Worksheet entries for Positive Ltd’s group:

4FINANCIAL ACCOUNTING
3. Worksheet for Positive Ltd:
Particulars
Positive
Ltd $
Smart
Ltd $
Adjustments
Debit Credit Group
Revenue
$
45,000.0
$
32,000.0
$
77,000.0
Expenses
$
17,000.0
$
21,000.0
$
625.0
$
38,625.0
Trading profit
$
28,000.0
$
11,000.0
$
38,375.0
Gains (losses) on sale of
non-current assets
$
4,000.0
$
4,000.0
$
625.0
$
7,375.0
Profit before tax
$
32,000.0
$
15,000.0
$
45,750.0
Income tax expense
$
6,000.0
$
2,500.0
$
375.0
$
8,125.0
Profit for the period
$
26,000.0
$
12,500.0
$
37,625.0
Retained earnings 1 July
2018
$
51,500.0
$
27,500.0
$
27,075.0
$
51,925.0
Transfer from general
reserve
$
15,000.0
$
7,500.0
$
5,800.0
$
16,300.0
$
33,000.0
Dividend paid
$
10,000.0
$
-
$
3,500.0
$
6,500.0
Retained earnings 30 June
2019
$
82,500.0
$
47,500.0
$
1,16,050.
0
Share capital
$
75,000.0
$
65,000.0
$
80,000.0
$
60,000.0
General reserve
$
5,000.0
$
10,000.0
$
16,300.0
$
9,300.0
$
8,000.0
Other components of equity
$
12,500.0
$
9,000.0
$
18,550.0
$
2,950.0
Total equity
$
1,75,000.0
$
1,31,500.
0
$
1,87,000.
0
Accounts payable
$
20,000.0
$
5,000.0
$
25,000.0
Deferred tax liability
$
9,000.0
$
5,000.0
$
14,000.0
Other non-current liabilities
$
1,25,000.0
$
1,15,000.
0
$
2,40,000.
0
Total liabilities $
1,54,000.0
$
1,25,000.
$
2,79,000.

5FINANCIAL ACCOUNTING
0 0
Total equity and liabilities
$
3,29,000.0
$
2,56,500.
0
$
4,66,000.
0
Plant
$
1,57,000.0
$
2,33,000.
0
$
3,90,000.
0
Accumulated depreciation –
plant
$ -
91,000.0
$ -
1,10,000.
0
$ -
2,01,000.
0
Land
$
10,000.0
$
10,000.0
$
10,000.0
$
30,000.0
Brands
$
40,000.0
$
-
$
6,000.0
$
34,000.0
Shares in Smart Ltd
$
1,23,000.0
$
-
$
1,23,000.0
$
-
Financial assets
$
55,000.0
$
1,03,500.
0
$
1,58,500.
0
Cash
$
5,000.0
$
2,500.0
$
7,500.0
Inventories
$
20,000.0
$
15,000.0
$
35,000.0
Goodwill
$
10,000.0
$
9,000.0
$
8,300.0
$
10,700.0
Deferred tax asset
$
1,800.0
$
1,800.0
Accumulated impairment
losses
$
-
$ -
6,500.0
$
6,000.0
$ -
500.0
Total assets
$
3,29,000.0
$
2,56,500.
0
$
4,66,000.
0

6FINANCIAL ACCOUNTING
Question 2:
1. Acquisition analysis:

7FINANCIAL ACCOUNTING
2. Worksheet entries in the books of Ping Pong Ltd:
Particulars
Ping Pong
Ltd
Sing Song
Ltd
Adjustments
Debit Credit Group
Sales
$
3,40,000.0
$
1,40,000.0
$
4,80,000.
0
Cost of sales
Opening inventory at 1
July 2018
$
20,000.0
$
5,000.0
$
25,000.0

8FINANCIAL ACCOUNTING
Purchases
$
2,00,000.0
$
73,000.0
$
2,73,000.
0
Closing inventory 30
June 2019
$ -
25,000.0
$ -
15,000.0
$ -
40,000.0
Cost of sales
$
1,95,000.0
$
63,000.0
$
2,58,000.
0
Gross profit
$
1,45,000.0
$
77,000.0
$
2,22,000.
0
Depreciation expenses
$
32,000.0
$
23,000.0
$
55,000.0
Interest expense
$
9,000.0
$
1,000.0
$
10,000.0
Management fee
expense
$
-
$
7,000.0
$
7,000.0
Other expenses
$
43,000.0
$
34,000.0
$
77,000.0
Total expenses
$
84,000.0
$
65,000.0
$
1,49,000.
0
Gross profit less
total expenses
$
61,000.0
$
12,000.0
$
73,000.0
Other income
$
-
Dividend revenue
$
5,000.0
$
2,000.0
$
5,000.0
$
2,000.0
Interest revenue
$
-
$
3,000.0
$
3,000.0
$
-
Management fee
revenue
$
7,000.0
$
-
$
7,000.0
$
-
Total other income
$
12,000.0
$
5,000.0
$
2,000.0
Operating profit before
tax
$
73,000.0
$
17,000.0
$
75,000.0
Income tax expense
$
28,000.0
$
5,000.0
$
33,000.0
Operating profit after
tax
$
45,000.0
$
12,000.0
$
42,000.0
Retained earnings 1
July 2018
$
35,000.0
$
5,000.0
$
40,000.0
Available for
appropriation
$
80,000.0
$
17,000.0
$
82,000.0
Interim dividend paid
$
10,000.0
$
2,000.0
$
2,000.0
$
10,000.0

9FINANCIAL ACCOUNTING
Final dividend
proposed
$
30,000.0
$
3,000.0
$
3,000.0
$
36,000.0
Dividends paid and
proposed
$
40,000.0
$
5,000.0
$
46,000.0
Retained earnings 30
June 2019
$
40,000.0
$
12,000.0
$
36,000.0
Share capital
$
4,00,000.0
$
1,50,000.0
$
1,70,000.0
$
3,80,000.
0
General reserve
$
20,000.0
$
30,000.0
$
20,000.0
$
70,000.0
Accounts payable
$
40,000.0
$
20,000.0
$
10,000.0
$
50,000.0
Dividend payable
$
30,000.0
$
-
$
3,000.0
$
27,000.0
12% unsecured notes
$
50,000.0
$
-
$
50,000.0
Other liabilities
$
16,000.0
$
15,000.0
$
31,000.0
Total liabilities
$
5,96,000.0
$
2,27,000.0
$
6,44,000.
0
Assets
Accounts receivable
$
50,000.0
$
26,000.0
$
76,000.0
Inventory
$
25,000.0
$
15,000.0
$
40,000.0
Dividend receivable
$
3,000.0
$
-
$
3,000.0
Unsecured notes – Ping
Pong Ltd
$
-
$
25,000.0
$
25,000.0
Investment in Sing
Song Ltd
$
2,00,000.0
$
-
$
2,00,000.0
$
-
Other assets
$
3,18,000.0
$
1,62,000.0
$
4,80,000.
0
Goodwill
$
20,000.0
$
20,000.0
Total assets
$
5,96,000.0
$
2,28,000.0
$
6,44,000.
0

10FINANCIAL ACCOUNTING
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11FINANCIAL ACCOUNTING
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