Assignment
Question 1
Consolidation of wholly owned subsidiary, pre-acquisition equity and BCVR entries for assets and liabilities
Lisa Ltd acquired all the issued shares of Kam Ltd on 1 January 2016 for $88 000. At this date the equity of Kam Ltd consisted of:
Share capital $ 100 000
General reserve 50 000
Retained earnings 10 000
All the identifiable assets and liabilities of Kam Ltd were recorded at amounts equal to their fair values except for:
Carrying amount Fair value
Fixtures & Fittings (cost $70 000) $50 000 $60 000
Inventory 10 000 20 000
Of the inventory on hand at 1 January 2016, 90% was sold by 30 June 2016. The remainder was all sold by 30 June 2017. The Fixtures & Fittings was considered to have a further 2-year life with benefits to be received equally in each of those years. There were no records in the books for a provision of legal claim worth 15,000 and patents of 90,000. These were reflected at fair value. The tax rate is 30%.
Required
Prepare the consolidated worksheet entries for the consolidated financial statements prepared by Lisa Ltd at 30 June 2016.
Show acquisition analysis calculation, BCVR entries and Pre-acquisition entries for 30.6.16
Question 2
The following information has been extracted from the accounting records of Samoa Ltd for the year ended 30 June 2016:
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Debit
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Credit
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Sales
Dividends paid
Cost of sales
Finance costs
Distribution costs
Transfer from general reserve
Marketing costs
Administrative costs
Proceeds from sale of plant and machinery
Carrying amount of plant and machinery
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$ 10 000
3 500 000
100 000
200 000
66 000
99 000
40 000
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$5 000 000
33 000
80 000
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Tax rate is 30%.
Required
Prepare a statement of profit or loss and other comprehensive income for Samoa Ltd, for the year ended 30 June 2016, and notes to the accounts in compliance with AASB 101. Please classify expenses by function.