RECENT ASSIGNMENT

COLLEGE OF BUSINESS
BAO5525
FINANCIAL AND CORPORATE ACCOUNTING

CONSOLIDATION ASSIGNMENT
SEMESTER 1 2014

Important information:

Submission deadline 26 May 2014
- A printed copy in Week 12 lecture class on (or mailbox No. 21 on the 10th floor before by 4.00 pm) and
- An electronic copy via email to salina.siddique@vu.edu.au
- Assignments submitted after the deadline will lose 5% of the possible assignment mark per day.
- Assignment declaration form must be completed and signed by the students and attached with the assignment document.
- A completed Assignment declaration form must be attached with both the printed copy and the soft (to be emailed) copy.

QUESTION

On 1 July 2010, Flinders Ltd acquired all the share capital of Elizabeth Ltd for $700 000.
At that date, Elizabeth Ltd.’s equity consisted of the following:
Share capital $ 500 000
General reserve 100 000
Retained earnings 50 000

At 1 July 2010, all the identifiable assets and liabilities of Elizabeth Ltd were recorded at fair value.

Financial information for Flinders Ltd and Elizabeth Ltd for the year ended 30 June 2014 is presented in the left-hand columns of the worksheet. It is assumed that both companies use the perpetual inventory system.

Additional information
(a) On January 1 2014, Elizabeth Ltd sold merchandise costing $40 000 to Flinders Ltd for $50 000. Half this merchandise was sold to external entities for $30 000 before 30 June 2014.
(b) It is estimated that goodwill acquired in Elizabeth Ltd has been impaired by an amount of $7 000
(c) Flinders Ltd sells plant to Elizabeth Ltd for $8 500. This plant had an initially cost Flinders Ltd $15 000, is 5 years old and has accumulated depreciation of $8000 at the date of sale. The remaining useful life is assessed as 7 years.
(d) At July 1 2013, there was a profit in the inventory of Flinders Ltd of $4000 on goods acquired from Elizabeth Ltd in the previous period.
(e) The tax rate is 30%.

CONSOLIDATION WORKSHEET
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Required:

Prepare the following statements for the year ended 30 June 2014:

1. Prepare elimination or adjustment entries in the consolidation journal
2. Complete the consolidation worksheet
3. Prepare the consolidated statement of Comprehensive Income for Flinders Ltd and its controlled entity
4. Prepare the consolidated statement of Financial Position for Flinders Ltd and its controlled entity

Marks allocation: A total 50 marks equivalent to 10 per cent of the overall assessment for the unit

Questions Marks
1. Elimination or Adjustment entries in the consolidation journal 28
2. Preparation of consolidation worksheet 12
3. Preparation of consolidation statement of comprehensive income 5
4. Preparation of statement of financial position 5
Total 50