Based on the information provided below, prepare appropriate consolidation journal entries forpossible account adjustment or elimination.Reference appropriate accounting standards to explain the approach which needs to be taken for theadjusting journals.Parent paid $110 000 on 30 June for all the shares of Subsidiary, whose equity at that date is sharecapital $72 000 and retained profits $28 000. However, the assets of Subsidiary are not all recordedat their fair value. Assume that all companies adopt the revaluation model under AASB 116. Thediscrepancies are:Carrying Amount$Fair ValueInvestments26 00054 000Accounts receivable14 0008 000PPE26 00012 000Inventory70 00076 000FranchiseNil10 000

Goodwill: Goodwill is an intangible asset. It is defined as the excess of cost of an acquired…

Answered: Based on the information provided…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In Bell Group's consolidation worksheet, the opening balance of retained earnings under 'group' column shows a balance of 70000. If there is a debit entry of 16000 in the NCI column, the opening balance of retained earnings under 'parent' column could be: A. 86000 B. 54000 C. 70000 D. 16000 Please show entries or details to explain.
H has a 75% owned subsidiary S. During the year ending 31 December 2021 H sold inventory to S for an invoice price of £800,000. S have since sold 75% of that inventory to third parties. The sale was at a mark-up of 25%on cost to H. S is the only subsidiary of H. What is the adjustment to inventory that would be included in the consolidated statement of financial position of H at the year-ending 31 December 2021 resulting from this sale? Show you calculations.
Kent Ltd owns all the share capital of Lodh Lta. That is, Lodh Ltd is a wholly own subsidiary of Kent Ltd. Requirea: In relation to the following intro-group transactions, prepare the consolidation worksheet aajusting entries for the preparation of consolidatea financial stoatements as of 30 June 2020. AJll parts are independent unlesS specified. Assume an income tax rate of 30% and that all income on sale of assets is taxable and expenses are deductible. a. On 1 January 2020, Kent Ltd sold inventory costing $10,000 to Lodh Ltd at a transfer (sole) price $16,.000. Loah Ltd sold half of this inventory to an external party for $10,000 (i.e., naif of the inventory is remoined with Lodh Ltd at the end of the year). b. During March 2018, Lodn Lta paid a $5,500 interim oaividend. C. Kent Ltd rented a spare warehouse to Lodh Lta. The total charge for the rental was $6,000. Loah Ltd paid the whole amount to Kent Ltd during the year. a. On 1 July 2019, Kent Ltd sold an item of plant costing $15…
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Intra-group transaction Question (worksheet adjustment entries for the following independent transactions) Sydney Ltd owns all of the shares of Mel Ltd. In relation to the following intragroup transactions, all parts of which are independent unless specified, prepare the consolidation worksheet adjusting entries for preparation of the consolidated financial statements as at 30 June 2019. Assume an income tax rate of 30%. (a) SYD Ltd sold inventory to MEL Ltd on 1 September 2018 for $30 000. This inventory had cost SYD Ltd $18 000. One-third of the inventory was sold by Mel Ltd to QLD Ltd for $14 000 and one-third to ADL Ltd for $14 200. (b) SYD Ltd manufactures certain items which it then markets through MEL Ltd. During the current period, SYD Ltd sold items for $60 000 to MEL Ltd at cost plus 20%. MEL Ltd has sold 75% of these transferred items at 30 June 2019. (c) During June 2019, MEL Ltd declared a $3000 dividend. The dividend was paid in August 2020. (d) In…
On July 1, 2018, the company adopted a plan to discontinue a division that qualifies as a component of an entityas defined by GAAP. The assets of the component were sold on September 30, 2018, for $50,000 less than theirbook value. Results of operations for the component (included in the above account balances) were as follows:1/1/2018–9/30/2018 2017Sales $400,000 $500,000Cost of goods sold (290,000) (320,000)Administrative expenses (50,000) (40,000)Selling expenses (20,000) (30,000)Operating income before taxes $ 40,000 $110,000In addition to the account balances above, several events occurred during 2018 that have not yet been reflectedin the above accounts:1. A fire caused $50,000 in uninsured damages to the main office building. The fire was considered to be aninfrequent but not unusual event.2. Inventory that had cost $40,000 had become obsolete because a competitor introduced a better product. Theinventory was sold as scrap for $5,000.3. Income taxes have not yet been…
Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. For each of the following independent scenarios in each of the independent parts: (1) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. Part A (a) On 20 December 20x1, a 90%-owned Subsidiary sold a piece of inventory which it bought for $200,000 to its Parent for $300,000. As at 31 December 20x1, that piece of inventory was still with the Parent and the net realisable value of the inventory was $250,000 on this date. (b) On 20 December 20x1, a Parent…
When a company owns 50% or more of another company, accounting standards require that the owner (parent) consolidates its financial statements with the subsidiary. Explain the rationale and the reasons behind that requirement
Requirements:1. Prepare the worksheet for consolidation purposes and the related eliminating entries on January1, 20x9 and December 31, 20x192. How much is the goodwill to be reported on the consolidated balance sheet on January 1, 2x19?3. How much is the Non-controlling interest on January 1, 2x19?
PLEASE SOLVE PART E
Assuming that the quasi reorganization shall be accomplished as follows: Property, plant and equipment are to be reduced to their fair market value of P800,000. Inventories are to be written down by P50,000. • Unaccrued obligation shall be recognized at P150,000. • The par value of ordinary Shares will be reduced to P5. 1. What is the balance of the retained earnings account as of 31 December 2019? Assuming that the quasi reorganization shall be accomplished as follows: Property, plant and equipment are to be reduced to their fair market value of P800,000. Inventories are to be written down by P50,000. • Unaccrued obligation shall be recognized at P150,000. • The par value of ordinary Shares will be reduced to P5. 2. What is the balance of the retained earnings account as of 31 December 2019?
Kent Ltd owns all the share capital of Lodh Ltd. That is, Lodh Ltd is a wholly own subsidiary of Kent Ltd. Required: In relation to the following intra-group transactions, prepare the consolidation worksheet adjusting entries for the preparation of consolidated financial statements as of 30 June 2020. All parts are independent unless specified. Assume an income tax rate of 30% and that all income on sale of assets is taxable and expenses are deductible. a. On 1 January 2020, Kent Ltd sold inventory costing $10,000 to Lodh Ltd at a transfer (sale) price $16,000. Lodh Ltd sold half of this inventory to an external party for $10,000 (i.e., half of the inventory is remained with Lodh Ltd at the end of the year). b. During March 2018, Lodh Ltd paid a $5,500 interim dividend. c. Kent Ltd rented a spare warehouse to Lodh Ltd. The total charge for the rental was $6,000. Lodh Ltd paid…

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