Corporate Accounting Assignment
Final Headache Ltd acquires all of the shares in Solutions Ltd on 30 June 2018. The financial statements for Final Headache Ltd and Solutions Ltd at 30 June 2019 (one year after acquisition) are provided below.
Additional information -
- Final Headache Ltd acquires Solutions Ltd on 30 June 2018 for $1.1 million cash.
- The directors of Final Headache Ltd consider that in the year to 30 June 2019 the value of
- goodwill has been impaired by an amount of $20 000.
- There are no intragroup transactions.
- Solutions Ltd did not issue any shares during 2019.
- The tax rate is 30 per cent.
- On the date at which Final Headache Ltd acquires Solutions Ltd, the carrying amount and fair value of the assets of Solutions Ltd are:
|
|
Carrying amount ($000)
|
Fair value ($000)
|
|
Cash
|
150
|
150
|
|
Accounts receivable
|
200
|
200
|
|
Land
|
750
|
800
|
|
Plant (cost of $1 000 000, accu,ulated depreciation of $200 000)
|
800
|
900
|
|
|
1,900
|
2,050
|
No revaluations are undertaken in Solutions Ltd's accounts before consolidation.
- At the date of acquisition of Solutions Ltd, Solutions Ltd's liabilities amount to $1.050 million and there are no contingent liabilities.
- The plant in Solutions Ltd is expected to have a remaining useful life of 10 years from 30 June 2018, and no residual value.
Required -
Provide the consolidated accounts of Final Headache Ltd and Solutions Ltd as at 30 June 2019 with the following:
-Goodwill computation
-Consolidation journal entries to:
- Revalue the assets of Solutions Ltd so that goodwill can subsequently be accounted for
- Eliminate the investment in Solutions Ltd and the pre-acquisition capital and reserves of Solutions Ltd
- Recognise impairment of goodwill
- Additional depreciation and decrease in Deferred tax liability
Consolidation worksheet for Final Headache Ltd and its controlled entity for the period ending 30 June 2019 showing columns of Eliminations and adjustments and Consolidated amounts and Consolidated statement of financial position of the Final Headache group.