QUESTION

Using the information below and the financial statementson the following page, prepare the following at 30 June 2013:

A. adjustment/elimination journal entries for consolidation (10 marks); and

B. consolidation worksheetand detailed calculation of non-controlling interest balance (5 marks); and

C. consolidated financial statements and statements of changes in equity of Platypus Limited and its controlled entities (5 marks).

INFORMATION

1. On 1 January 2007 Platypus Ltd purchased 100% of the issued capital of Emu Ltd for $650,000 cash. On acquisition Emu Ltd accounts showed: Share capital $700,000 and Retained earnings $159,000. All assets and liabilities were recorded at fair value except for land that was undervalued by $80,000.

2. On 1 July 2008Platypus Ltd and Emu Ltd each acquired 35% of the issued capital of Koala Ltd for a combined total of $400,000 cash. The balance sheet of Koala Ltd at the acquisition date showed: Share capital $250,000 and Retained earnings $56,000. All assets and liabilities were recorded at fair value except foran item of plant that was undervalued by $30,000. At that time the plant had a remaining life of 6 years and accumulated depreciation of $24,000. The plant was still on hand at 30 June 2013.

For the year ended 30 June 2013:

3. On 1 July 2012Koala Ltd sold an item of plant to Emu Ltd for $72,750 when its carrying value in Koala’s books was $69,000 (original cost $110,400 and original estimated life of 12 years).

4. The opening inventory on 1 July 2012 in Platypus Ltd included stock of $29,000 acquired from Emu Ltd.

5. During the year Emu Ltd made sales of inventory to Koala Ltd of $116,000, while Koala Ltd sold $184,000 of inventory to Platypus Ltd.

6. Closing inventories on 30 June 2013 included the following: Platypus Ltd $55,000 (bought from Koala Ltd) and Koala Ltd $28,000 (bought from Emu Ltd).

7. Platypus Ltd charged management fees to both Emu Ltd and Koala Ltd. Emu Ltd also charged management fees to Koala Ltd.

8. Dividends were declared/paid by the three companies.

AT 30 JUNE 2013	PLATYPUS LTD	EMU LTD	KOALA LTD
	$	$	$
INCOME STATEMENTS
Sales revenue	1,413,500	978,300	777,100
Cost of goods sold	798,000	538,060	427,400
Gross profit	615,500	440,240	349,700
Other income
Management fee revenue	22,600	21,000	–
Dividend revenue	222,750	36,750	–
Gain on sale of plant	–	–	3,750
Expenses
Depreciation expense	(126,200)	(49,000)	(93,700)
Management fee expense	–	(12,600)	(31,000)
Other expenses	(326,100)	(263,800)	(221,400)
Profit before tax	408,550	172,590	7,350
Income tax expense	(127,200)	(50,050)	(2,400)
Profit for the year after tax	281,350	122,540	4,950
Retained earnings at start of year	659,100	434,000	243,900
Dividend paid/declared	(250,000)	(186,000)	(105,000)
Retained earnings at year end	690,450	370,540	143,850
BALANCE SHEETS
Equity
Share capital	850,000	700,000	250,000
Retained earnings	690,450	370,540	143,850
Current Liabilities
Accounts payable	184,000	71,010	114,750
Income tax payable	125,900	66,700	2,600
Dividends payable	125,000	50,000	55,000
Provision for employee benefits	19,200	15,700	12,900
Non-Current Liabilities
Loans	675,100	175,100	645,000
Provision for employee benefits	21,900	19,400	14,100
Deferred tax liability	6,900	9,700	–
	2,698,450	1,478,150	1,238,200
Current Assets
Accounts receivable	276,300	104,100	110,800
Allowance for doubtful debts	(15,500)	(7,000)	(4,200)
Dividends receivable	69,250	19,250	–
Inventory	112,100	144,200	75,900
Non-Current Assets
Land and buildings	800,000	610,800	652,000
Plant – at cost	901,200	601,200	699,600
Accumulated depreciation – plant	(294,900)	(194,400)	(297,600)
Deferred tax asset	–	–	1,700
Investment in Emu Ltd	650,000	–	–
Investment in Koala Ltd	200,000	200,000	–
	2,698,450	1,478,150	1,238,200

9. Non-controlling interests to be recognised.

10. Platypus Ltd has the following accounting policies which have been in place for the groupfor many years: (i) Revaluation adjustments on acquisition are to be made on consolidation only, not in the books of the subsidiary; (ii) Non-controlling interest is measured at fair value; (iii) Intragroup sales of inventory to be at a markup of 25% on cost; (iv) Plant is depreciated straight-line over its estimated life, with no residual value; and (v) all amounts to be recorded to the nearest whole dollar.

11. The company tax rate is currently 30% and it has been this rate for many years.

NOTE:

· You MUST number journal entries as they relate to the point numbers given in the information below. Where more than one journal is needed, add the letters a,b,c,…etc to them. That is, if two journals are required to record the acquisition detailed in information point 1, then the first journal will be 1a and the second is 1b. Short narrations are expected for each journal entry.

· The consolidated statements required for both the group and the parent company are: the statement of comprehensive income, statement of financial position, and statement of changes in equity. Notes to the statements are not required.

· You may “cut and paste” the financial information on the next page into your excel file, but no other information is to be copied into your file.

Plagiarism, Cheating & Collusion

Plagiarism, cheating or collusion is regarded as a serious breach of the University’s academic standards. Students must carefully read the Academic Rules on Plagiarism, Cheating & Collusion. Refer to the School of Accounting Handbook for further details

 

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Corporate Accounting Systems

Consolidated Financial Statements with Non-Controlling Interests

INSTRUCTIONS

1. The assignment is to be prepared using Excel spreadsheet

2. The assignment marking guidecan be found as the last pages of this document.Use the marking guide sheet to see what is expected and how your work will be marked. Significant emphasis is placed on the correctness of the journal entries so ensure you spend adequate time on these. Review your work before submission and consider how well have met the expected standards (performance levels) for the criteria identified.

3. Marks will be deducted for poor quality presentation, for incorrect work, and for missing work.

QUESTION

Using the information below and on the next two pages, prepare the following as at 30th June 2014:

PART A: Adjustment/elimination journal entries for consolidation at that date; and

PART B: Detailed calculation of non-controlling interest balance and consolidation worksheet; and

PART C: Consolidated financial statements and statements of changes in equity for the group and parent.

INFORMATION

For the year ended 30 June 2012:

1. On 1 July 2011 Harbour Ltd created a group entity when it purchased 80% of the issued capital of Bridge Ltd for $440,000 cash. On acquisition Bridge Ltd’s accounts showed: Share capital $300,000 and Retained earnings $125,000. All assets and liabilities appearing in Bridge Ltd’s financial statements were fairly valued, except:

· An item of Bridge Ltd’s plant, that had originally cost $157,000 and had a carrying value of $100,480, was undervalued by $30,000. The plant was still on hand at 30 June 2014.

· Bridge Ltd had an internally developed identifiable intangible asset, a patent, with a fair value of $35,000.

During the year Bridge Ltd made sales of inventory to Harbour Ltd of $70,200. Harbour Ltd’s closing inventories on 30 June 2012 included $33,600 bought from Bridge Ltd (which included the intragroup mark-up on original cost price).

For the year ended 30 June 2013:

2. On 1 January 2013 it was decided that goodwill acquired in Bridge Ltd should be marked down at a rate of 10% per annum from this date forward (% based on the original value you calculated at acquisition).

3. Also on 1 January 2013 Harbour Ltd sold plant to Bridge Ltd for $35,000. This was financed by a short-term interest-free loan from Harbour Ltd. The plant had originally cost $82,000 when purchased on 1 January 2010.

Harbour Ltd declared and paid dividends of $50,000 for the year. Bridge Ltd did not declare or pay any dividends for the year.

For the year ended 30 June 2014:

4. During the year Bridge Ltd made sales of inventory to Harbour Ltd of $88,100.

5. Harbour Ltd’sinventories included the following amounts bought from Bridge Ltd (which included the intragroup mark-up on original cost price): Closing inventory on 30 June 2014 was $13,300; and Opening inventory on 1 July 2013 was $9,100.

6. Harbour Ltd charged management fees to Bridge Ltd.

7. Dividends were declared/paid by both companies.

8. Non-controlling interests to be recognized.

ADDITIONAL INFORMATION:

· The company tax rate is currently 30% and it has been this rate for many years.

· Harbour has the following accounting policies for the group:

(i) Revaluation adjustments on acquisition are to be made on consolidation only, not in the books of any subsidiary;

(ii) Non-controlling interests are measured at the proportionate share of a subsidiary’s identifiable net assets;

(iii) Intragroup sales of inventory to be at a markup of 40% on cost;

(iv) Plant is depreciated using the diminishing value method at a rate of 20% p.a. (also known as the declining-balance or diminishing-balance method); and

(v) All calculated amounts to be rounded to the nearest whole dollar.

NOTE:

· You MUST number your journal entries as they relate to the point numbers for each “event” as given in the information. Where more than one journal is needed for an “event” to be completely accounted for add the letters a,b,c,…etc to them as necessary. [For example, if three separate journal entries are required to fully record the information detailed in point number 1, then the first journal will be 1a and the second is to be 1b and the third 1c.] Short narrations are expected for each journal entry. Marks will be lost if journals are not presented in a clear and professional manner (i.e. poor or unclear presentation can include showing the debit entry on one page but the credit entry on another, or not clearly distinguishing between debit and credit entries).

· The required statements for both the group and the parent company are: the statement of comprehensive income, statement of financial position, and statement of changes in equity. Notes to the statements are not required. Marks will be lost if statements are not presented in a clear and professional manner (i.e. poor or unclear presentation can include splitting the reports over two pages, so start each statement on a new page!).

· You may “cut and paste” the financial information on the next page into your excel file, but no other information is to be copied into your file from anywhere else.

· You are expected to use at least the basic formula functions in Excel when preparing worksheets and financial statements (i.e. use Excel formulas to add totals and sub-totals etc, rather than calculating values manually and then just typing them in to the spreadsheet!).

AT 30 JUNE 2014

HARBOUR LTD

BRIDGE LTD

$

$

INCOME STATEMENTS

Sales revenue

1,413,500

978,300

Cost of goods sold

798,000

508,300

Gross profit

615,500

470,000

Other income

Management fee revenue

22,600

–

Dividend revenue

69,800

–

Expenses

Depreciation expense

(126,200)

(49,000)

Management fee expense

–

(22,600)

Other expenses

(326,100)

(263,800)

Profit before tax

255,600

134,600

Income tax expense

(76,680)

(40,380)

Profit for the year after tax

178,920

94,220

Retained earnings at start of year

59,120

134,320

Dividend paid/declared

(150,000)

(86,000)

Retained earnings at year end

88,040

142,540

BALANCE SHEETS

Equity

Share capital

850,000

300,000

Retained earnings

88,040

142,540

Current Liabilities

Accounts payable

191,960

115,860

Income tax payable

95,900

66,700

Dividends payable

75,000

50,000

Non-Current Liabilities

Loans

950,000

565,100

Provision for employee benefits

21,900

19,400

Deferred tax liability

6,900

–

2,279,700

1,259,600

Current Assets

Accounts receivable

276,300

104,100

Allowance for doubtful debts

(15,500)

(7,000)

Dividends receivable

40,500

–

Inventory

112,100

144,200

Non-Current Assets

Land and buildings

800,000

610,800

Plant – at cost

901,200

601,200

Accumulated depreciation – plant

(294,900)

(194,400)

Deferred tax asset

–

700

Shares in Opera House Ltd

20,000

–

Investment in Bridge Ltd

440,000

–

2,279,700

1,259,600

200109 CORPORATE ACCOUNTING SYSTEMS ASSIGNMENT MARKING CRITERIA & STANDARDS – AUTUMN 2014

CRITERIA

UNSATISFACTORY

BELOW EXPECTATIONS

MEETS MINIMUM EXPECTATIONS FOR A PASS

EXCEEDS MINIMUM EXPECTATIONS

SIGNIFICANTLY EXCEEDS EXPECTATIONS

A. Journal entries:

Correctness and

Completeness

of journals

Four+ events not correctly recorded and/or missing and/or included incorrectly

? 0 marks

Three events not correctly recorded and/or missing and/or included incorrectly

? 3 marks

Two events not correctly recorded and/or missing and/or included incorrectly

? 5 marks

One event not correctly recorded and/or missing and/or included incorrectly

? 7 marks

Every required journal is correct, with none missing or included incorrectly

? 9 marks

Presentation

Numbering

Narrations

of journals

Three or more journals are not presented clearly and/or not complete and/or not numbered correctly

? 0 marks

One or two journals not presented clearly and/or not complete and/or not numbered correctly

? ½ mark

All journals are presented clearly and numbered correctly. All narrations are complete and informative

? 1 mark

B. Consolidation Worksheet and Non-Controlling Interest Calculation:

Non-Controlling Interest Calculation

Four+ errors and/or total does not agree to the Balance Sheet

? 0 marks

Three errors but total agrees to the Balance Sheet

? ½ mark

Two errors but total agrees to the Balance Sheet

? 1½ marks

One error but total agrees to the Balance Sheet

? 2½ marks

Presented well, no errors and agrees to the Balance Sheet

? 3 marks

Consolidation Worksheet

Poor presentation and/or not balanced due to errors and/or missing entries

? 0 marks

Not clearly presented but does balance.

? 1 mark

Clearly presented. No errors and/or missing entries

? 2 marks

C. Consolidated Financial Statements

Presentation of Comprehensive Income Statements & Balance Sheets

(for both Group and Parent)

Poor presentation and/or more than three errors and/or missing headings or amounts

? 0 marks

Not acceptably presented and/or three errors and/or missing headings or amounts

? ½ mark

Acceptably presented, but with two errors and/or missing headings or amounts

? 1½ marks

Acceptably presented, but with one error and/or missing heading or amount

? 2 marks

Correctly presented. No errors and/or missing headings or amounts

? 3 marks

Statements of Changes in Equity

(for both Group and Parent)

One or more errors and/or does not agree to the Balance Sheet

? 0 marks

Could be presented more clearly but agrees to the Balance Sheet

? 1½ marks

Clearly presented and agrees to the Balance Sheet

? 2 marks

Deductions: 1. Late submission of printed or electronic version ? -10% per day 2. Electronic version not same as printed version ? -50%

STUDENT ID: STUDENT NAME: FINAL MARK: / 20

[NOTE: Errors flowing from earlier incorrect journals, etc will not be treated as further errors]

200109 Corporate Accounting Systems

Consolidated Financial Statements with Non-Controlling Interests

Assignment – spring 2013

INSTRUCTIONS

1. The assignment is to be submitted as an individual attempt. It must be prepared using Excel spreadsheet and be entirely your own work from this semester – i.e. do not use or copy any file, in whole or in part, from any previous semester or from any other student. Create a NEW EXCEL FILE for this assignment and use your student number as the file name.

2. Marking guidecan be found as the last page of this assignment question file.Print this page and complete. Use the marking guide sheet to see what is expected and how your work will be marked. Significant emphasis is placed on the correctness of the journal entries so ensure you spend adequate time on these. Review your work before submission and consider how well have met the expected standards (performance levels) for the criteria identified.

3. After handing in the printed copy, the excel file must be uploaded to vUWS using TURNITIN.Further instructions on this process will be provided on vUWS closer to the due date. The excel file MUST EXACTLY MATCH the printed version and not be modified after the submitted version was printed. Uploading a file that doesn’t match exactly, or failing to upload the excel file on time, will result in a significant penalty!The file will be checked against other students’ submissions for potentialplagiarism.

4. Marks will be deducted for poor quality presentation, for incorrect work, and for missing work. The presentation of the financial statements must the format of the examples and end-of-chapter exercise in chapter 29 of the textbook.

QUESTION

Using the information below and the financial statements on the following page, prepare the following at 30 June 2013:

A. adjustment/elimination journal entries for consolidation (10 marks); and

B. consolidation worksheet and detailed calculation of non-controlling interest balance (5 marks); and

C. consolidated financial statements and statements of changes in equity of Platypus Limited and its controlled entities (5 marks).

INFORMATION

1. On 1 January 2007 Platypus Ltd purchased 100% of the issued capital of Emu Ltd for $650,000 cash. On acquisition Emu Ltd accounts showed: Share capital $700,000 and Retained earnings $159,000. All assets and liabilities were recorded at fair value except for land that was undervalued by $80,000.

2. On 1 July 2008 Platypus Ltd and Emu Ltd each acquired 35% of the issued capital of Koala Ltd for a combined total of $400,000 cash. The balance sheet of Koala Ltd at the acquisition date showed: Share capital $250,000 and Retained earnings $56,000. All assets and liabilities were recorded at fair value except for an item of plant that was undervalued by $30,000. At that time the plant had a remaining life of 6 years and accumulated depreciation of $24,000. The plant was still on hand at 30 June 2013.

For the year ended 30 June 2013:

3. On 1 July 2012 Koala Ltd sold an item of plant to Emu Ltd for $72,750 when its carrying value in Koala’s books was $69,000 (original cost $110,400 and original estimated life of 12 years).

4. The opening inventory on 1 July 2012 in Platypus Ltd included stock of $29,000 acquired from Emu Ltd.

5. During the year Emu Ltd made sales of inventory to Koala Ltd of $116,000, while Koala Ltd sold $184,000 of inventory to Platypus Ltd.

6. Closing inventories on 30 June 2013 included the following: Platypus Ltd $55,000 (bought from Koala Ltd) and Koala Ltd $28,000 (bought from Emu Ltd).

7. Platypus Ltd charged management fees to both Emu Ltd and Koala Ltd. Emu Ltd also charged management fees to Koala Ltd.

8. Dividends were declared/paid by the three companies.

AT 30 JUNE 2013

PLATYPUS LTD

EMU LTD

KOALA LTD

$

$

$

INCOME STATEMENTS

Sales revenue

1,413,500

978,300

777,100

Cost of goods sold

798,000

538,060

427,400

Gross profit

615,500

440,240

349,700

Other income

Management fee revenue

22,600

21,000

–

Dividend revenue

222,750

36,750

–

Gain on sale of plant

–

–

3,750

Expenses

Depreciation expense

(126,200)

(49,000)

(93,700)

Management fee expense

–

(12,600)

(31,000)

Other expenses

(326,100)

(263,800)

(221,400)

Profit before tax

408,550

172,590

7,350

Income tax expense

(127,200)

(50,050)

(2,400)

Profit for the year after tax

281,350

122,540

4,950

Retained earnings at start of year

659,100

434,000

243,900

Dividend paid/declared

(250,000)

(186,000)

(105,000)

Retained earnings at year end

690,450

370,540

143,850

BALANCE SHEETS

Equity

Share capital

850,000

700,000

250,000

Retained earnings

690,450

370,540

143,850

Current Liabilities

Accounts payable

184,000

71,010

114,750

Income tax payable

125,900

66,700

2,600

Dividends payable

125,000

50,000

55,000

Provision for employee benefits

19,200

15,700

12,900

Non-Current Liabilities

Loans

675,100

175,100

645,000

Provision for employee benefits

21,900

19,400

14,100

Deferred tax liability

6,900

9,700

–

2,698,450

1,478,150

1,238,200

Current Assets

Accounts receivable

276,300

104,100

110,800

Allowance for doubtful debts

(15,500)

(7,000)

(4,200)

Dividends receivable

69,250

19,250

–

Inventory

112,100

144,200

75,900

Non-Current Assets

Land and buildings

800,000

610,800

652,000

Plant – at cost

901,200

601,200

699,600

Accumulated depreciation – plant

(294,900)

(194,400)

(297,600)

Deferred tax asset

–

–

1,700

Investment in Emu Ltd

650,000

–

–

Investment in Koala Ltd

200,000

200,000

–

2,698,450

1,478,150

1,238,200

9. Non-controlling interests to be recognised.

10. Platypus Ltd has the following accounting policies which have been in place for the group for many years: (i) Revaluation adjustments on acquisition are to be made on consolidation only, not in the books of the subsidiary; (ii) Non-controlling interest is measured at fair value; (iii) Intragroup sales of inventory to be at a markup of 25% on cost; (iv) Plant is depreciated straight-line over its estimated life, with no residual value; and (v) all amounts to be recorded to the nearest whole dollar.

11. The company tax rate is currently 30% and it has been this rate for many years.

NOTE:

· You MUST number journal entries as they relate to the point numbers given in the information below. Where more than one journal is needed, add the letters a,b,c,…etc to them. That is, if two journals are required to record the acquisition detailed in information point 1, then the first journal will be 1a and the second is 1b. Short narrations are expected for each journal entry.

· The consolidated statements required for both the group and the parent company are: the statement of comprehensive income, statement of financial position, and statement of changes in equity. Notes to the statements are not required.

· You may “cut and paste” the financial information on the next page into your excel file, but no other information is to be copied into your file.

Plagiarism, Cheating & Collusion

Plagiarism, cheating or collusion is regarded as a serious breach of the University’s academic standards. Students must carefully read the Academic Rules on Plagiarism, Cheating & Collusion. Refer to the School of Accounting Handbook for further details

RULES WILL BE STRICTLY ENFORCED

200109 CORPORATE ACCOUNTING SYSTEMS ASSIGNMENT MARKING CRITERIA & STANDARDS – SPRING 2013

CRITERIA

UNSATISFACTORY

BELOW EXPECTATIONS

MEETS MINIMUM EXPECTATIONS FOR A PASS

EXCEEDS MINIMUM EXPECTATIONS

SIGNIFICANTLY EXCEEDS EXPECTATIONS

A. Journal entries:

Correctness/completeness

of journals

Four or more events not correctly recorded and/or missing and/or included incorrectly

? 0 marks

Three events not correctly recorded and/or missing and/or included incorrectly

? 3 marks

Two events not correctly recorded and/or missing and/or included incorrectly

? 5 marks

One event not correctly recorded and/or missing and/or included incorrectly

? 7 marks

Every required journal is correct, with none missing or included incorrectly

? 9 marks

Presentation, numbering and

narrations

Three or more journals are not presented clearly and/or not complete and/or not numbered correctly

? 0 marks

One or two journals not presented clearly and/or not complete and/or not numbered correctly

? ½ mark

All journals are presented clearly and numbered correctly. All narrations are complete and informative

? 1 mark

B. Consolidation Worksheet and Non-Controlling Interest Calculation:

Consolidation Worksheet

Poor presentation and/or not balanced due to errors and/or missing entries

? 0 marks

Not clearly presented but does balance.

? 1 mark

Clearly presented. No errors and/or missing entries

? 2 marks

Non-Controlling Interest Summary Calculation

Three or more errors and/or not reconciled to the Balance Sheet

? 0 marks

Two errors but is reconciled to the Balance Sheet

? 1 mark

One error but is reconciled to the Balance Sheet

? 2 marks

Information is presented well, no errors and reconciled to the Balance Sheet

? 3 marks

C. Consolidated Financial Statements

Presentation of Comprehensive Income Statements & Balance Sheets

(for both Group and Parent)

Poor presentation and/or more than three errors and/or missing headings or amounts

? 0 marks

Not acceptably presented and/or three errors and/or missing headings or amounts

? ½ mark

Acceptably presented, but with two errors and/or missing headings or amounts

? 1½ marks

Acceptably presented, but with one error and/or missing heading or amount

? 2 marks

Correctly presented. No errors and/or missing headings or amounts

? 3 marks

Statements of Changes in Equity (for both Group and Parent)

One or more errors and/or not reconciled to the Balance Sheet

? 0 marks

Information could be presented more clearly but is reconciled to the Balance Sheet

? 1 mark

Information is clearly presented and reconciled to the Balance Sheet

? 2 marks

STUDENT ID: STUDENT NAME: TOTAL MARK: / 20

[NOTE: Errors flowing from earlier incorrect journals, etc will not be treated as further errors]