Erik Ltd and Finn Ltd: Consolidation Worksheet and Analysis Report

This report presents a detailed analysis of a consolidation worksheet, focusing on the financial statements of Erik Ltd and Finn Ltd following a business combination. The report includes worksheet entries at July 1, 2017, and June 30, 2018, covering business combination valuation and pre-acquisition entries. It examines the impact of these entries on the consolidated balance sheet, highlighting changes in assets, liabilities, and equity. The analysis includes interpretations of the financial position of Finn Ltd after acquisition, demonstrating how adjustments affect the company's overall financial health. The conclusion summarizes the key findings, emphasizing the changes in various financial statement items. The report references relevant literature on consolidation and financial reporting.

Consolidation Work Sheet,
Consolidated Financial
Statements

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK ..............................................................................................................................................1
A. Worksheet Entries at 1 July 2017...........................................................................................1
B. Work sheet entries at 30 June 2018........................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Consolidation workbook is an instrument used to start preparing a parent and their
subsidiaries' reorganized financial statements. It demonstrates both firms' individual book values,
the required changes and knockout as well as the final centralized beliefs (Maresca, 2016). To
prepare consolidated financial statements a dummy location first must be developed by adding
reference file entity name. Combined enterprise accounts may not display the most precise image
of the entire institution's business activity since all activities among places within the
organisation are consisted in the total estimated document. After consisting of these
intercompany proceedings, that don't influence overall company's profit or net worth. At
combined stage balance sheets and income statements can overstate the company's real price of
financial activity. In the report consist of Erik Ltd acquired shares of Finn Ltd after that prepare
consolidated balance sheet and journal entries (Youell, 2016).
TASK
A. Worksheet Entries at 1 July 2017
1. Business combination valuation entries
1

2. Pre-acquisition entries
Erik
Ltd
Finn
Ltd
Adjustments Group
Dr Cr
Cash 11 000 20 600 31600
Receivables 25 200 20 000 12600 2 32600
Other assets 10 000 8 000 1
1
1
12000
900
1100
32000
Inventory 55 000 42 000 1 4000 101000
Shares in Finn Ltd 153 800 0 153800 2 0
Plant 210 000 107 000 3000 1 314000
Accum depreciation (85 000) (22 000) 1 11000 (96000)
380 000 175 600 415200
2

Dividend payable 25 000 12 600 2 12600
Other liabilities 75 000 25 000 3000
2400
1200
3600
1
1
1
1
110200
Share capital 130 000 90 000 90000
Retained earnings 93 500 36 000 36000
General reserve 56 500 12 000 12000
Business
combination
valuation reserve
- - 1
2
2100
15800
5600
2800
8400
1100
1
1
1
1
0
380 000 175 600 197500 197500 415200
Interpretation – From the above table it is understanding that when the amount increase
in assets side that was recorded into debit side and when the amount was decreasing in asset side
that was recorded into credit side. After that calculate total of numbers and calculate total of
asset side as well as debit side.
Finn Ltd
Consolidated statement of financial position
as at 1 July 2017
Assets: In bookkeeping assets are defined as resources which are owned by an organisation that
are resulted from business transaction. Prepaid expenditures that are not been used still or which
that do not gets and the costs that have a future value that can be measure.
Liabilities: This can be defining as a financial obligation for companies that is needed to be paid
by organizations. Eventually, companies want that their liabilities should be lower as much as
possible because more liabilities indicate the poor condition. As well as organizations should
have enough assets for making payment of liabilities.
Retained Earnings: This head under stockholder's equity includes reserved part of corporation's
net income which is retained as reserve. Simply it is amount of profit generated by corporate
which is not distributed to shareholder or stockholders
3

Interpretation – As per the above table it has been analysed that after acquisition Finn
Ltd prepared consolidated balance sheet that presents its actual position of the company. After all
the adjustments it is getting that total current assets of the company 165200, total assets 415200
and total equity 280000 and total equity and liabilities 415200.
B. Work sheet entries at 30 June 2018
1. Business Combination valuation entries
4

5

2. Pre-acquisition entries
Next year
No BCVR entry is required for the inventory or for the claims settlement. The pre-
acquisition entry becomes:
= 36000 + 700 = 36700
= 15800 – 700 = 15100
CONCLUSION
As per the above report prepare consolidated balance sheet and financial statement of
Finn Ltd after that changes are coming into different items. Some items amount are increasing
and some are decreasing.
6

REFERENCES
Books and Journal
Maresca, M., 2016. The Spreadsheet Space: Eliminating the Boundaries of Data Cross-
Referencing. Computer. 49(9). pp.78-85.
Youell, N., 2016. New Revenue Recognition Guidelines: There's Work to Be Done. Journal of
Corporate Accounting & Finance. 28(1). pp.32-41.
Selivanoff, P., 2017. Taking control of pay-for-performance contracts: hospital finance leaders
have a pivotal role to play in improving GAAP and quality compliance under pay-for-
performance contracts, and to fulfill that role, they must have a sound work plan and
make sure it is well executed. Healthcare Financial Management. 71(8). pp.58-66.
Klimczaka, K. M., Dynel, M. and Pikos, A., 2016. Goodwill impairment test disclosures under
uncertainty. Accounting and Management Information Systems. 15(4). p.639.
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