50.1K

Verified Solution

Link Copied!

On 01 July 2020, Sunshine Manufacturing Ltd acquired all the issued shares of Gold coast Ltd for $227,000. The equity of gold coast at this date is as follows:

Share capital $65000

Retained earnings $36000

Al the identifiable assets and liabilities of Gold coast Ltd were recorded at amounts equal to their fair values at acquisition date except for.

Carrying amount Fair value

Inventory 82,000 88,000

Machine (the cost is:78,000) 54,000 57,000

The equipment was considered to have a further useful life: 5yrs

Of the inventory, 80% was sold by 30 June 2021.

The following information was provided by the two companies at 30 June 2021.

Sunshine Goldcoast

Profit before tax 112,000 12500

Income tax expense 48,000 4200

Profit for the year 64,000 8300

Retained earnings (01/07/2020) 80,000 36,000

Retained earnings (30/06/2021) 144,000 44,300

Share capital 360,000 65,000

Retained earings 144,000 44,300

General reserve 10,000 0

Asset revaluation surplus 18,500 0

Liabilities 128,500 22,000

661,000 131,300

Land 129,000 20,000

Plant and Equipment 360,000 125,600

Accumulated depreciation 110,000 33,000

Inventory 55,000 18,700

Investment in Goldcoast 227,000 0

661,000 131,300

In addition, there are some intra-group transactions between Sunshine and Goldcoast shown below:

a. During the year, Sunshine sold inventory costing 4,500 to Goldcoast for 6,000. At the end of the year, 30% of the inventory is still held on hand by Goldcoast.

b. on 1 Jannuary 2021, Goldcoast sold a plant to Sunshine. The plant has carrying amount of 115,000. Tomson sold it to Sunshine 130,000. The remaining useful life is estimated to be 5 years.

Required: Prepare the following on 30 June 2021.

1. Prepare the Acquisition analysis

2. Consolidation adjusting entries

3. Consolidation worksheet

4. Consolidated financial statements (including consolidated statement of profit or loss and other comprehensive income, consolidated statement of equity

and consolidated statement of financial position.)

Answer & Explanation Solved by verified expert

See Answer