RECENT ASSIGNMENT

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How: Students need to: x submit a hard copy of their report (i.e., electronic lodgement is NOT acceptable);
x the report must be properly typed and printed (i.e., no handwriting); and x the report MUST be accompanied by a completed and signed assignment coversheet. A soft copy of the coversheet can be found under the same folder. Please make sure that you correctly indicate your tutorial teacher’s name.
Late submission will not be accepted.
This is an individual assignment. Therefore, your report MUST be your original work.
1
On 1 July 2011, Parent Ltd acquired 100% of the share capital of Son Ltd for $ 1,000,000. At that time, the equity of Son Ltd consisted of:
Share capital $ 600,000
General reserve 170,000
Retained earnings 80,000
$ 850,000
All the identifiable assets and liabilities of Son Ltd were recorded at fair value except for:
Carrying Amount Fair Value
Land $ 550,000 $ 600,000
Plant and equipment $ 395,000 $ 435,000
On 1 July 2011, the plant and equipment had a further five-year life and was expected to be used evenly over that time. It originally cost $ 600,000, and had accumulated depreciation of $ 205,000 at 1 July 2011. The land is still on hand at 30 June 2015. The goodwill was impaired by $8,700 on 30 June each year since acquisition.
The following intra-group transactions have taken place:
(i) On 10 June 2015, Son Ltd paid $60,000 to Parent Ltd for services rendered.
(ii) During the year ended 30 June 2014, Son Ltd sold inventory to Parent Ltd for $90,000. The inventory originally cost $80,000, and half was sold by 30 June 2014. The inventory has since been sold during the year ending 30 June 2015.
(iii)During the year ended 30 June 2015, Son Ltd sold inventory to Parent Ltd for $108,000. There was a $16,000 mark-up on the cost. All inventory remains on hand at 30 June 2015.
(iv) On 1 July 2012, Parent Ltd sold computers to Son Ltd for $50,000. At the time of transfer, the computers had a carrying amount of $44,000 in the books of Parent Ltd. The computers have five years of life remaining (For depreciation of non-current assets, Parent Ltd and Son Ltd use straight line method)
2
Required:
(a) Prepare an acquisition analysis at 1 July 2011.
(b) Prepare the revaluation and pre-acquisition journal entries at 30 June 2015.
(c) Prepare the consolidation journal entries for intra-group transactions at 30 June 2015.
3



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