Consolidation worksheet for financial year ended 30 June 2020 Leafy Ltd Green Ltd Adjustments Consolidated Debit Ref Credit Entity $00 So00 So0 $00 450 $00 $000 $00 3,450 Sales revenue Less cost of goods sold Opening inventories Add purchases Less closing inventories Cost of goods sold Gross profit Dividend revenue Management fee 1,970 4,970 375 256 40 450 591 2,060 1,504 3,114 425 30 279 1,481 674 2,010 1,440 489 70 70 revenue 20 20 Interest revenue Depreciation expense Finance costs 13 13 225 15 13 197 407 125 48 e 160 Other expenses Profit before tax 325 855 119 138 45 24 c/d 20 448 Тах expense Profit after tax for the 265 16.5 ilg 9 317.5 590 93 year Retained earnings 1 July 2019 Dividends paid Dividends declared Retained earnings 30 June 2020 824 343 222 b/i 48 993 (50) (50) (25) (45) 25 (110) 45 (110) 366 1,254 750 1,439.50 750 400 Issued capital Revaluation surplus 400 b 190 190 Fair value adjustment Shareholders' equity 56 b/a 56 2,194 766 2,379.50 Assets Cash Accounts receivable Dividends receivable Inventories 190 170 360 173 109 h 45 237 45 425 k 45 30 279 674 Investment in Green Ltd 670 670 200 b 200 450 Loan to Leafy Ltd e 80 1,729 2,308 Land Buildings Accumulated depreciation Plant and equipment Accumulated depreciation Goodwill (net) Deferred tax asset 1,199 1,340 a 968 (475) (525) (1,000) 1025 690 10 1,725 (275) (590) 65 (290) 45 70 89 b/c 24 35 25 27 13.5 73.5 Total assets 4,352 2,076 5,581.50 Less liabilities Current taxes payable Accounts payable Dividend payable Loan from Green Ltd 87 50 45 111 198 292 110 45 45 h. 297 k 110 200 200 e Mortgage loan Deferred tax liabilities Net assets 1,355 1,100 2,455 90 28 a 24 142 2,194 766 1,842.50 1,842.50 2,379.50 What was the amount of investment the parent has in the subsidiary? O a. 200 Ob. 670 O. 766 O d. 450
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
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