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Assignment ACC705 T2 2017 


Consolidation worksheet entries 

Ben Ltd operates a number of supermarkets with an emphasis on the supply of quality produce

The operations of Sam Ltd are primarily in the fine fruit market. Believing that the acquisition of Sam Ltd would enable Ben Ltd to expand its supply of quality produce to its customers, Ben Ltd commenced actions to acquire the shares of Sam Ltd. On 1 July 2013, Ben Ltd acquired all the issued shares (cum div.) of Sam Ltd for $123 500. At this date the equity of Sam Ltd consisted of:


                        Share capital                           $100 000

                        Reserves                                 5 000

                        Retained earnings                   10 000


On 1 July 2013, Sam Ltd had recorded a dividend payable of $6000 and goodwill of $5000 (net of accumulated impairment losses of $7000). The dividend was paid in August 2013. In the previous year’s annual report Sam Ltd had reported the existence of a contingent liability for damages based upon a lawsuit by a customer who had slipped on some fallen fruit in one of the stores operated by Sam Ltd. Ben Ltd calculated that this liability had a fair value of $10 000.

Sam Ltd also had some customer databases that were not recorded as assets but Ben Ltd placed affair value of $6000 on these items. Sam Ltd believed that the databases had a future life of 4 years. All of the identifiable assets and liabilities of Sam Ltd were recorded at amounts equal to their fair values except for the following:


                                                                        Carrying amount        Fair value

                        Plant (cost $120 000)              $94 000                                   $96 000

                        Land                                        80 000                         85 000

                        Inventory                                20 000                         24 000


   The plant had an expected remaining useful life of 10 years. The land was sold by Sam Ltd in

February 2015. The inventory was all sold by 30 June 2014.

   In February 2016, Sam Ltd transferred $3000 of the reserves on hand at 1 July 2013 to retained earnings. The remaining $2000 was transferred in February 2017.

   The court case involving the damages sought by the customer was settled in May 2017.

Sam Ltd was required to pay $7500 to the customer.




Prepare the consolidation worksheet entries for the preparation by Sam Ltd of its consolidated financial statements at 30 June 2017.




The following details are taken from the accounting records of Mercy Ltd as at 30 June 2016:

    Debit   Credit  
  Plant and equipment (net of depreciation)


Buildings (net of depreciation)

Investments (long-term)

Accounts receivable

Allowance for impairment of receivables


Bank overdraft

Accounts payable

Dividend payable

Goodwill (net of impairment)

Share capital (3 200 000 shares)

General reserve

  $  800 000

600 000

900 000

460 000

600 000


520 000




300 000







$    60 000


200 000

400 000

256 000


2 400 000

290 000

  Retained earnings

Income tax payable

Other debtors



      50 000

    375 000

249 000


      $4 230 000     $4 230 000  

Additional information

(a) Profit for the year was $581 000.

(b) Balance of retained earnings at 1 July 2015 was $80 000.

(c) During the year $30 000 was transferred from retained earnings to general reserve.

(d) A final dividend of 8c per share has been declared by directors and is not subject to shareholders’ approval.




Prepare the statement of financial position and statement of changes in equity to comply with AASB 101. Include Notes to the accounts for the above financial statements

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