Response to the following problem:
On 1 July 2010 Able Ltd acquired all the share capital of Zhan Ltd for $700 000. At that date, Zhan Ltd's equity consisted of the following:
Share capital $ 750 000
General reserve 150 000
Retained earnings 75 000
At 1 July 2010, all the identifiable assets and liabilities of Zhan Ltd were recorded at fair value.
Financial information for Able Ltd and Zhan Ltd for the year ended 30 June 2016 is presented in the left-hand columns of the worksheet. It is assumed that both companies use the perpetual inventory system.
Additional information
(a) During the 2015-16 year, Zhan Ltd paid a dividend of $45,000 from profits earned before 20 June 2010.
(b) On January 1 2016, Zhan Ltd sold merchandise costing $60 000 to Able ltd for $75,000. Half this merchandise was sold to external entities for $45,000 before 30 June 2016.
(c) It is estimated that goodwill acquired in Zhan Ltd has been impaired by an amount of $10,500.
(d) Able Ltd sells plant to Zhan Ltd for $12,750. This plant had an initially cost Able Ltd $22,500, is 5 years old and has accumulated depreciation of $12,000 at the date of sale. The remaining useful life is assessed as 7 years.
(e) At July 1 2015, there was a profit in the inventory of Able Ltd of $6,000 on goods acquired from Zhan Ltd in the previous period.
(f) The tax rate is 30%.
Required
Prepare the Consolidated General Journal Entries, Consolidated Worksheet and Consolidated Financial Statements for the year ended 30 June 2016.
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Financial Satements
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Able Ltd
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Zhan Ltd
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Sales revenue
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3 000 000
|
1 392 000
|
|
Cost of sales
Wages and salaries
Depreciation
Other expenses
|
(1 050 000)
(91 500)
(7 650)
(8 250)
|
(1 005 000)
(48 000)
(7 200)
-
|
|
Total expenses
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(1 157 400)
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(1 060 200)
|
|
|
1 842 600
|
331 800
|
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Profit from sale of plant
Other income
|
1 200
45 000
|
-
|
|
Legal fees
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(5 250)
|
-
|
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Profit before income tax
Income tax expense
|
1 883 550
551 565
|
331 800
132 720
|
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Profit for the year
Retained earnings (1/7/15)
|
1 331 985
106 230
|
199 080
105 420
|
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Dividend paid
|
1 438 215
(185 565)
|
304 500
(45 000)
|
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Retained earnings (30/6/16)
Share capital
General reserve
|
1 252 650
900 000
180 000
|
259 500
750 000
150 000
|
|
|
2 332 650
|
1 159 500
|
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Other components of equity (1/7/15)
Avail-for-sale fin assets
|
15 000
1 500
|
15 000
4 500
|
|
Other components of equity (30/6/16)
|
16 500
|
19 500
|
|
Total equity
Deferred tax liability
|
2 349 150
90 000
|
1 179 000
45 000
|
|
Total equity and liabilities
|
2 439 150
|
1 224 000
|
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Shares in Zhan Ltd
Cash
Inventory
Other current assets
Avail-for-sale fin assets
Land
Plant and equipment
Accum Depcn & Impair losses
Goodwill
Goodwill- Accum Impair Loss
Deferred Tax Asset
|
1 050 000
300 000
555 000
22 650
61 500
345 000
150 000
(45 000)
-
-
|
-
415 500
54 000
450 000
102 000
180 000
42 000
(19 500)
-
-
|
|
|
2 439 150
|
1 224 000
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