| (b) Consolidation Worksheet | Parent Ltd | Subsidiary Ltd | Adjustments | Consolidated | |
| Dr | Cr | ||||
| Sales | 1,050,000 | 509,100 | 150,000 | 1,409,100 | |
| Less Cost of Sales | 510,000 | 281,000 | 130,000 | ||
| 30,000 | 631,000 | ||||
| Gross Profit | 540,000 | 228,100 | 778,100 | ||
| Add Dividend Income | 35,000 | 0 | 35,000 | ||
| Add Rental Income | 12,000 | 0 | 12,000 | 0 | |
| Add Gain on Sale of Machine (Proceeds less Carrying amount) | 24,000 | 0 | 24,000 | 0 | |
| Less Occupancy Expenses including Rent | 37,000 | 29,500 | 12,000 | 54,500 | |
| Less Admin Expenses | 46,000 | 15,000 | 61,000 | ||
| Less Depreciation & Amortisation | 62,000 | 40,000 | 10,000 | 1,400 | 110,600 |
| Less Other Expenses | 40,000 | 10,000 | 50,000 | ||
| Profit before tax | 426,000 | 133,600 | 537,000 | ||
| Less Income Tax Expenses | 80,000 | 24,600 | 9,000 | 3,000 | |
| 420 | 6,000 | ||||
| 7,200 | 97,820 | ||||
| Profit after tax | 346,000 | 109,000 | 439,180 | ||
| Retained earnings (1 July 2019) | 124,000 | 90,000 | 5,000 | 1,500 | |
| 21,000 | |||||
| 91,000 | 98,500 | ||||
| Less Dividends (paid and declared) | -70,000 | -35,000 | -105,000 | ||
| Retained earnings (30 June 2020) | 400,000 | 164,000 | 432,680 | ||
| General reserve | 36,000 | 0 | 36,000 | ||
| Share Capital | 400,000 | 100,000 | 100,000 | 400,000 | |
| BCVR | 0 | 0 | 70,000 | ||
| 23,000 | |||||
| 149,000 | 56,000 | 0 | |||
| Deferred tax liabilities | 0 | 0 | 30,000 | ||
| 4,500 | 24,000 | 49,500 | |||
| Trade & Other Payables | 80,000 | 75,000 | 4,000 | ||
| 37,500 | 113,500 | ||||
| Dividend payable | 70,000 | 20,000 | 90,000 | ||
| Bank Overdraft | 90,000 | 0 | 90,000 | ||
| Total Shareholders’ equity and Liabilities | 1,076,000 | 359,000 | 1,211,680 | ||
| Land | 142,000 | 100,000 | 80,000 | 322,000 | |
| Machinery, at cost | 370,000 | 135,000 | 24,000 | 481,000 | |
| Less Accumulated Depreciation | -120,000 | -55,000 | 1,400 | -173,600 | |
| Patent at cost | 40,000 | 0 | 100,000 | 140,000 | |
| Less Accumulated Amortisation | 0 | 0 | 15,000 | -15,000 | |
| Investment in Subsidiary Ltd | 340,000 | 0 | 340,000 | 0 | |
| Goodwill | 0 | 15,000 | 23,000 | 38,000 | |
| Dividend receivable | 20,000 | 0 | 20,000 | ||
| Deferred tax assets | 0 | 0 | 6,000 | 420 | 0 |
| 7,200 | 12,780 | ||||
| Inventories | 169,000 | 60,000 | 20,000 | 209,000 | |
| Trade & Other Receivables | 95,000 | 79,000 | 4,000 | ||
| 37,500 | 132,500 | ||||
| Cash and cash equivalent | 20,000 | 25,000 | 45,000 | ||
| Total Assets | 1,076,000 | 359,000 | 835,020 | 835,020 | 1,211,680 |
JOURNALS
| At January 2019 | |||||
| Net fair value of identifiable assets and liabilities of Glider Ltd | |||||
| $100,000 + 70,000 (Equity) | |||||
| Land | ($180,000-$100,000) X 70% = | $56,000 | |||
| Patent | $100,000 X70% = | $70,000 | |||
| Inventories | $30,000 X 70% = | $21,000 | |||
| Total assets | $147,000 | ||||
| Less existing good Will | -$15,000 | ||||
| Plus Equity | $170,000 | ||||
| NFVIA | $302,000 | ||||
| Consideration | $340,000 | ||||
| Good Will | $38,000 | ||||
| Less existing good Will | -15000 | ||||
| Good will | $23,000 | ||||
| Business combination valuation entries: | DR | CR | |||
| 30/06/2020 | |||||
| Land | $80,000 | ||||
| DTL | $24,000 | ||||
| BCVR | $56,000 | ||||
| Patent | $100,000 | ||||
| Deferred tax liability | $30,000 | ||||
| BCVR | $70,000 | ||||
| Amortisation Expense | $10,000 | ||||
| Retained Earnings (1/7/19) | $5,000 | ||||
| Accumulated Amortisation | $15,000 | ||||
| Deferred tax liability | $4,500 | ||||
| Income tax expense | $3,000 | ||||
| Retained earnings (1/7/19) | $1,500 | ||||
| Dr | Good will | $23,000 | |||
| Cr | BCVR | $23,000 | |||
| A) | Sales Revenue | $150,000 | |||
| COGS | $130,000 | ||||
| Inventory | $20,000 | ||||
| DTA | $6,000 | ||||
| ITE | $6,000 | ||||
| Account Payable | $37,500 | ||||
| Account Receivable | $37,500 | ||||
| B) | Retained Earnings | $21,000 | |||
| ITE | $9,000 | ||||
| COGS | $30,000 | ||||
| C) | Proceeds on sale Plant | $104,000 | |||
| Carrying amount of asset | $80,000 | ||||
| Machinery | $24,000 | ||||
| DTA | $7,200 | ||||
| ITE | 7200 | ||||
| Accumlated Depreciation | $1,400 | ||||
| Depreciation Expense | $1,400 | ||||
| (24,000/12 X 7 X 10% = 1400) | |||||
| ITE | $420 | ||||
| DTA | $420 | ||||
| D) | Rent Revenue | $12,000 | |||
| Rent Expense | $12,000 | ||||
| Accounts Receivable | $4,000 | ||||
| Accounts Payable | $4,000 | ||||