Prepare consolidation journal entries for the current financial year showing calculations, and narration for each journal entry
1  Consolidation journal entries for the fair value adjustment of the Plant-Touch U in Subsidiary  Ltd and the resulted tax effect
2 Consolidation journal entries relating to pre-tax depreciation entry resulting because of fair value adjustment of the Plant-Touch-U asset
3 Consolidation journal entries relating to tax effect result from the depreciation entry resulting because of fair value adjustment of the Plant-Touch-U to prepare group accounts for the current year
4  Consolidation journal entries for the elimination of Parent Ltd’s investment in Subsidiary Ltd
5 Consolidation journal entries relating to the management fees for the current year
6 Consolidation journal entries relating intra-group inventory-Type High transactions and its tax effects
7 Consolidation journal entries relating intra-group inventory-Type Low transactions and its tax effects
8 Consolidation journal entries relating intra-group inventory-Type Rich transactions and its tax effects
9 Consolidation journal entries relating to amortisation of goodwill.
10 Consolidation journal entries relating intra-group plant-Steel-Ball transactions and its tax
11 Consolidation journal entries relating intra-group Plant-Aluminium-Spade transactions and its tax
12 Consolidation journal entries relating to intra-group dividends.
13 Itemise and show the non-controlling interests in Subsidiary Ltd on acquisition date
14  Itemise and show the non-controlling interest movements in share capital and reserves between the acquisition date and beginning of the current financial year
15 Itemise and show the non-controlling interests of the Parent Ltd Group for the current financial year
16 Comppute the total non-controlling interest
17 Link the  consolidation journal entry amounts to  consolidation adjustment column(s)
18 Prepare the Group financcial statements column using Microsoft Excel formulae
19 Prepare the Group statement of changes in equity

 

item Aspect Event Data
1 Acquisiton of Subsidiary by Parent Acquisiton date of Subsidiary by the Parent 1/07/2018
2 % ownership of Parent in Subsidiary 80
3 Subsidiary Share Capital at acquisition date $1,500,000
4 Subsidiary Retained Earnings at acquisition date $300,500
5 Fair value adjustment at acquisition date At acquisiton date, the fair value of Plant Touch-U in Subsidiary is $1,600.00
6 Cost of Plant Touch-U  is $1,300.00
7 At acquisition date, accumulated Depreciation of Plant Touch-U $900
8 At acquision date, the remaining useful life in years of Plant Touch U 4
9 Intra-group service  transaction Subsidiary pays management fees to Parent during the financial year. This item is included in ‘other’ income and expenses 5500
10 Intra-group inventory transaction:
Parent sell inventory (Type-High) to subsidiary in current period		 During the current financial year Parent Ltd sold inventory to Subsidiary Ltd at a price of $26,000
11 The inventory cost Parent to produce $18,000
12 % of this inventory is still on hand with Subsidiary Ltd at the end of the financial year. 40
13 Intra-group inventory transaction:
Subsidiary sell inventory (Type-Low) to Parent in current period		 During the current financial year Subsidiary Ltd sold inventory to Parent Ltd at a price of 22000
14 The inventory cost Subsidiary to produce $16,000
15 % of this inventory is still on hand with Parent Ltd at the end of the financial year. 30
16 Intra-group inventory transaction: Subsidiary sell inventory (Type Rich) to Parent in previous period brought into the current period During the current financial year Subsidiary Ltd sold inventory to Parent Ltd at a price of $13,000
17 The inventory cost Subsidiary to produce $10,000
18 % of this inventory is still on hand with Parent Ltd at beginning of the financial year 40
19 Goodwill impairment Parent Ltd Management believes goodwill has impaired in the previous years by $18,000
20 Parent Ltd Management believes goodwill has further impaired in the current period years by $8,000
21 Intra-group depreciable non-current asset (Plant-Steel-Ball) transaction:
Subsidiary sell non current asset to Parent in current period		 Beginnig of the current year, Subsidiary Ltd sold an item of plant-hard to Parent Ltd for a price of $46,000
22 Cost of the plant-hard at the time of intra-group transaction is $51,000
23 Accumulated depreciation of the plant-hard at the time of intra-group transaction is $26,000
24 Remaining useful life of the plant-hard at the time of sale with no expected residual value, in years 10
25 Intra-group depreciable non-current asset (Plant-Aluminium-Spade) transaction:
Parent  sell non current asset to Subsidiary  in previous period		 Beginnig of the previous year, Parent Ltd sold an item of plant-happy to Subsidiary Ltd for a price of 47600
26 Cost of that item of plant-happy at the time of intra-group transaction is $52,600
27 Accumulated depreciation of the plant-happy at the time of intra-group transaction is $27,600
28 Remaining useful life of the plant-happy at the time of sale with no expected residual value, in years 5
29  Income tax rate as % is 30
30 Note The management of Parent Ltd values any non-controlling interest in Subsidiary Ltd at fair value

 

Detailed reconciliation of opening and closing retained earnings Parent Ltd Subsidiary Ltd
Sales revenue $480,000 $115,000
Cost of goods sold -$100,000 -$40,000
Other expenses -$80,000 -$15,000
Goodwill impairment expense
Other revenue $70,000 $25,000
Gain on bargain purchase
Profit before tax $370,000 $85,000
Tax expense -$60,000 -$30,000
Profit for the year $310,000 $55,000
Retained earnings—beginning of year $1,000,000 $800,000
Retained earnings available for distribution $1,310,000 $855,000
Dividends paid -$160,000 -$30,000
Dividend declared -$40,000 -$10,000
Retained earnings—30 June 2X20 $1,110,000 $815,000
Statement of financial position Parent Ltd Subsidiary Ltd
Shareholders’ equity
Revaluation and other reserves
Retained earnings $1,110,000 $815,000
Share capital $4,000,000 $1,500,000
Current liabilities
Accounts payable $20,000 $30,000
Dividends payable $40,000 $10,000
Deferred tax liability
Non-current liabilities
Loans $600,000 $250,000
Deferred tax liability
Total of liabilities and equity $5,770,000 $2,605,000
Current assets
Cash $150,000 $25,000
Accounts receivable $242,000 $175,000
Dividends receivable $8,000 $0
Inventory $500,000 $300,000
Deferred tax asset
Non-current assets
Land $1,400,000 $1,105,000
Plant $1,870,000 $1,300,000
Accumulated depreciation -$400,000 -$300,000
Deferred tax asset
Goodwill on acquistion
Accumulated goodwill impairment
Investment in Subsidiary Ltd $2,000,000 $0
Total assets $5,770,000 $2,605,000

 

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