Consolidated Financial Statements, Adjustments, and Analysis Report

This report provides a comprehensive analysis of consolidated financial statements, focusing on the acquisition of Possum Ltd by Lead Beaters Ltd. The report includes a worksheet, consolidated income statement, and balance sheet, along with an acquisition analysis and consolidation journals. It details the adjustments made for plant and machinery, inventory, and a contingent liability, explaining the rationale behind each adjustment. The report highlights the importance of stating assets at fair value, calculating depreciation, and accounting for unrealized profits in inventory transactions. Furthermore, it references relevant literature to support the methodologies and accounting treatments applied, providing a clear understanding of the consolidation process and its impact on financial reporting.

Running head: CONSOLIDATED FINANCIAL STATEMENTS AND RATIONALE FOR
ADJUSTMENTS
Consolidated Financial Statements and Rationale for Adjustments
Name of the Student
Name of the University
Author’s Note

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CONSOLIDATED FINANCIAL STATEMENTS AND RATIONALE FOR
ADJUSTMENTS
Table of Contents
Worksheet..................................................................................................................................2
Consolidated Income Statement.................................................................................................3
Consolidated Balance Sheet.......................................................................................................4
Acquisition Analysis..................................................................................................................5
Consolidation Journals...............................................................................................................6
Worksheet Entries......................................................................................................................7
Rationale for Intragroup Transactions.......................................................................................7
References..................................................................................................................................9

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CONSOLIDATED FINANCIAL STATEMENTS AND RATIONALE FOR
ADJUSTMENTS
Worksheet

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CONSOLIDATED FINANCIAL STATEMENTS AND RATIONALE FOR
ADJUSTMENTS
Consolidated Income Statement

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CONSOLIDATED FINANCIAL STATEMENTS AND RATIONALE FOR
ADJUSTMENTS
Consolidated Balance Sheet

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CONSOLIDATED FINANCIAL STATEMENTS AND RATIONALE FOR
ADJUSTMENTS
Acquisition Analysis

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CONSOLIDATED FINANCIAL STATEMENTS AND RATIONALE FOR
ADJUSTMENTS
Consolidation Journals

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CONSOLIDATED FINANCIAL STATEMENTS AND RATIONALE FOR
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Worksheet Entries
Rationale for Intragroup Transactions
Followings are the used rationales by the company for intergroup transactions:
Plant and Machinery: The plant and machinery of the company were stated in the books of
Possum Limited at the acquisition data and the values are stated at the value that is greater
than $6000. It is needed to state the same asset at a considerable amount after the process of
consolidation and it is done so that the value of the assets in the financial statements reflects
the economic reality. It is needed to consider 10% as the depreciation rate. It is needed to
derive the depreciation expenses with the help of the given deprecation rate of 10%
(Lombrano and Zanin 2013).
Inventory: The presence of the business inventory can still be seen in the accounts Lead
Beaters Limited at the date of June 30, 2017 and the company has recorded the same value of
inventory at the cost value basis and the inclusion of cost value and unrealized amount of

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CONSOLIDATED FINANCIAL STATEMENTS AND RATIONALE FOR
ADJUSTMENTS
profit can be seen in this. There would be reduction in the inventory of the company due to
the fact that the reported cost is less than the amount recorded by the business entity. The
company has taken into account the transaction of inventory for the assessment of the effects
of after consolidation on the financial reports of the company. At the same time, the
application of the relevant adjustments can be seen in this case (Morozova and Safonova
2015).

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CONSOLIDATED FINANCIAL STATEMENTS AND RATIONALE FOR
ADJUSTMENTS
References
Lombrano, A. and Zanin, L., 2013. IPSAS and local government consolidated financial
statements—proposal for a territorial consolidation method. Public Money &
Management, 33(6), pp.429-436.
Morozova, T. and Safonova, E., 2015. Forecasting and modeling in the management of a
company value in the financial statements. SCOPE ACADEMIC HOUSE B&M
PUBLISHING.