BAO2203: Financial Statement Consolidation Report - Semester 1, 2019

This report provides a comprehensive analysis of the consolidation of financial statements for Ezy Manufacturing Ltd (Ezy), a listed public company, and its subsidiaries, Range Pty Ltd and Swift Works Ltd. The report includes detailed calculations and journal entries related to the acquisition of Range Pty Ltd and Swift Works Ltd, including the determination of goodwill and the recording of fair value adjustments. It addresses the consolidation process, accounting for intercompany transactions, and preparing a consolidated balance sheet. The report covers the consolidation of financial statements, addressing topics like acquisition analysis, goodwill calculation, and the elimination of intercompany profits and dividends. The report includes a consolidation worksheet and the consolidated financial statements for the year ended June 30, 2019, demonstrating the impact of the subsidiaries on Ezy's financial position and performance. The report also provides journal entries to adjust for the difference between fair value and identifiable net assets acquired by the Ezy Group.

Running head: CONSOLIDATION OF FINANCIAL STATEMENT
Consolidation of Financial statement
Name of the Student:
Name of the University:
Author’s Note:

1CONSOLIDATION OF FINANCIAL STSTEMENT
Table of Contents
Answer to question 1:.................................................................................................................2
Answer to question 2:.................................................................................................................3
Answer to question 3:.................................................................................................................4

2CONSOLIDATION OF FINANCIAL STSTEMENT
Answer to question 1:
Date Name of Accounts Amount Amount
01-Jul-15 Investment in Range Pty Ltd $ 1,24,00,000
Shar Capital $ 96,00,000
Cash $ 28,00,000
(To record investment in Range Pty Ltd)
01-Jul-17 Investment in Swith Works Ltd $ 36,00,000
Other Acquistion expenses $ 1,00,000
Cash $ 37,00,000
(To record investment in Swift Works
Ltd)
Acquisition analysis of Range Pty Ltd
Ordinary share capital $ 20,00,000
Preference share capital $ 10,00,000
General Reserve $ 10,00,000
Retained Earnings $ 15,00,000
Total value of assets as on 1 July 15 $ 55,00,000
Fair Value Adjustments:
Obsolesce of Inventory $ -5,00,000
Fair value appreciation of land $ 10,00,000
Impairment of PPE $ -6,75,000
Patent $ 15,000
Total Fair value adjustment $ -1,60,000
Net Book Value of assets of Swift Pty Ltd $ 53,40,000
Shares issued $ 96,00,000
Cash paid $ 28,00,000
Total Purchase consideration $ 1,24,00,000
Value of Goodwill $ 70,60,000
Acquisition analysis of Swift Works Limited:
Share Capital $ 25,00,000
General Reserve $ 2,80,000
Retained Earnings $ 11,00,000
Value of total assets $ 38,80,000
Purchase consideration $ 36,00,000

3CONSOLIDATION OF FINANCIAL STSTEMENT
Other Acquisition costs $ 1,00,000
Total acquisition cost of the Swift Works Ltd $ 37,00,000
Capital Reserve $ 1,80,000
Answer to question 2:
Date Name of Accounts Amount Amount
30-Jun-
19 Patent 15000
Land 1000000
Loss on revaluation 160000
Inventory 500000
Impirement of PPE 675000
(To record the difference
between fair value and
identifiable net assets acquired
bu the Ezy Group.
Ordinery Share Capital 4500000
Preference Share Capital 1000000
General Reserve 2280000
Retained Earnings 2700000
Goodwill
1370000
0
Investment in Subsidiaries
2400000
0
Capital Reserve 180000
(To eliminate investment in
subsidiary and record gain or
goodwill on acquisition)
Retained Earnings 21000
Inventory 21000
(To eliminate un recognised
intergroup profit)
Inventory 98000
Retained earnings 98000
(To eliminate unrecognised
profit in opening inventory)
Retained earnings 100000
Dividend receivable 75000

4CONSOLIDATION OF FINANCIAL STSTEMENT
Dividend income 25000
(To eliminate intercompany dividend)
Answer to question 3:
Consolidation worksheet
Ezy Ltd Range
Ltd
Swift
Works
Ltd
Debit Credit
Consolida
ted
Balance
A$ A$ A$
Revenue
4,40,00,
000
21,20,00
0
32,00,0
00
4,93,20,00
0
Expenses
2,90,00,
000
16,00,00
0
23,00,0
00
3,29,00,00
0
Profit before tax
1,50,00,
000 5,20,000
9,00,00
0
1,64,20,00
0
Income tax expense
90,00,00
0 1,60,000
3,00,00
0 94,60,000
Profit
60,00,00
0 3,60,000
6,00,00
0 69,60,000
Retained Earnings
(1/7/18)
72,00,00
0
15,00,00
0
12,00,0
00
270000
0 72,00,000
1,32,00,
000
18,60,00
0
18,00,0
00
12,22,60,0
00
Interim Dividend paid 4,00,000 25,000 25000 4,00,000
Final Dividend declared 6,00,000 75,000 75000 6,00,000
10,00,00
0 -
1,00,00
0 10,00,000
Retained Earnings
(30/06/19)
1,22,00,
000
18,60,00
0
17,00,0
00 23000
1,57,37,00
0
Non-current assets
Depreciable assets
1,23,00,
000
74,10,00
0
46,00,0
00
104000
0
2,32,70,00
0
Accumulated
depreciation
-
6,60,000
-
12,00,00
0
-
9,20,00
0 -27,80,000
Investment in other
entities
2,40,00,
000 7,50,000
240000
00 7,50,000
Loan to SWL
10,00,00
0
100000
0
Deferred tax asset 2,80,000 4,80,000
1,60,00
0 9,20,000
Patents and Trademarks
(net)
6,80,00
0 15000 6,95,000
Property 2,54,000
20,00,00
0
12,00,0
00 325000 31,29,000

5CONSOLIDATION OF FINANCIAL STSTEMENT
goodwill
141920
00
1,41,92,00
0
Current assets
Cash
11,84,00
0 8,40,000
6,50,00
0 26,74,000
Receivables
12,00,00
0
24,40,00
0
4,70,00
0 41,10,000
Inventory
12,00,00
0 6,00,000
4,70,00
0 77000 21,93,000
Total Assets
4,07,58,
000
1,33,20,
000
73,10,0
00
4,91,53,00
0
Non-current liabilities
Debentures
14,60,00
0
12,20,00
0
6,80,00
0 33,60,000
Other Non-current
Liabilities
15,00,00
0
10,00,0
00
100000
0 15,00,000
Bank Loan
14,22,00
0
16,40,00
0
7,00,00
0 37,62,000
Current liabilities
Payables 1,20,000
13,60,00
0
2,20,00
0 17,00,000
Current tax liability 1,16,000 7,40,000
2,30,00
0 10,86,000
Dividend payable 8,00,000 75000 7,25,000
Total liabilities
39,18,00
0
64,60,00
0
28,30,0
00
1,21,33,00
0
Net assets
3,68,40,
000
68,60,00
0
44,80,0
00
3,70,20,00
0
Equity
Share capital -ordinary
shares
2,10,00,
000
20,00,00
0
25,00,0
00
45,00,0
00
2,10,00,00
0
Share capital -preference
shares
30,00,00
0
10,00,00
0
100000
0 30,00,000
General reserve 6,40,000
20,00,00
0
2,80,00
0
22,80,0
00 6,40,000
Retained earnings
1,22,00,
000
18,60,00
0
17,00,0
00
35,60,0
00
1,22,00,00
0
Capital reserve
1,80,00
0 1,80,000
Total equity
3,68,40,
000
68,60,00
0
44,80,0
00
3,70,20,00
0