Topic 8 - TutorialSolutions - S1 2016 PDF

ACW2491 Company Reporting
Tutorial Solution
Semester 1 2016
Topic 8: Consolidations: Wholly Owned Subsidiaries
CHAPTER 18
RQ1. A subsidiary is an entity that is controlled by another entity, a parent.
RQ4. There are 3 key elements:
- Power over the investee
- Exposure or rights to variable returns from the parents involvement with the
subsidiary
- The ability to use the power over the subsidiary to affect the amount of the parents
returns.
RQ5. Power is defined as existing rights that give the current ability to direct the relevant
activities An investor has power over an investor when it has the current right to direct the
relevant activities of the investee.
CHAPTER 19
RQ1. Refer Section 19.4.2 of the text
RQ8. The purpose of these entries is to make consolidation adjustments so that in the consolidate
balance sheet the identifiable assets, liabilities and contingent liabilities of the subsidiary are
reported at fair value. This is to fulfil step 3 of the acquisition method required to account for
business combinations by AASB 3.
RQ10. The consolidation worksheet is just a worksheet. The consolidation worksheet entries do
not affect the underlying financial statements or the accounts of the parent or the subsidiary.
Hence, if last years profits required to be adjusted on consolidation, then potentially retained
earnings needs to be adjusted in the current period.
Similarly, a BCVR entry to recognise the land on hand at acquisition at fair value is made in the
consolidation worksheet for each year that the land remains in the subsidiary. The entry does not
change from year to year. Again the reason is that the adjustment to the carrying amount of the
land is only made in a worksheet and not in the actual records of the subsidiary itself.
PQ19.1
Goodwill
$0
A. Pre-acquisition entries at 1 July 2016:

Retained earnings (1/7/16)
Share capital
General reserve
Shares in Rodney Ltd
Dr
Dr
Dr
Cr
60 000
100 000
40 000
200 000

Tutorial Solution
Semester 1 2016
B. Pre-acquisition entries at 30 June 2017

Share capital
General reserve
Shares in Rodney Ltd
Transfer from General reserve
Dr
Dr
Dr
Cr
60 000
100 000
40 000
Dr
Cr
15 000
200 000
15 000
Note that neither of the dividend transactions have any effect on the pre-acquisition entries
regardless of whether the dividends are paid/declared from pre- or post-acquisition equity.
PQ19.6
Goodwill
$7 520
Worksheet entries at 1 July 2016

Business combination valuation entries
Inventory
Dr
Deferred tax liability
Cr
Business combination valuation reserve
6 400
1 920
Cr
Patent
Dr
Cr
12 000
Accumulated depreciation - equipment Dr

Equipment
Cr
Cr
40 000
4 480
2. Pre-acquisition entries
Dr
Share capital
Dr
Business combination valuation reserve Dr
Goodwill
Dr
Shares in Jeff Ltd
Cr
Worksheet entries at 30 June 2017

Cost of sales
Dr
Income tax expense
Cr
Transfer from business combination
valuation reserve
Cr
2
3 600
Cr
8 400
32 000
2 400
Cr
5 600
68 800
80 000
18 480
7 520
174 800
6 400
1 920
4 480

Tutorial Solution
Semester 1 2016
Patent
Dr
Cr
12 000
Accumulated depreciation - plant

Dr
Plant
Cr
Cr
40 000
Depreciation expense
Accumulated depreciation
Dr
Cr
800

Income tax expense
Dr
Cr
240
Pre-acquisition entries
Dr
Share capital
Dr
Business combination valuation reserve Dr
Goodwill
Dr
Shares in Jeff Ltd
Cr
Impairment loss goodwill
Dr
Accum. impairment losses goodwill
General reserve
Dr
Transfer from RE to general reserve Cr
3 600
Cr
8 400
32 000
2 400
Cr
5 600
800
240
68 800
80 000
18 480
7 520
174 800
1 200
Cr
1 200
20 000
20 000
Transfer from business comb. valuation reserve Dr

Cr
4 480
4 480
PQ19.9
Goodwill
$300
1. Worksheet entries at 30 June 2016

Plant
3
Dr
Cr
Cr
Cr
20 000
Dr
Cr
500
18 000
600
1 400
500

Tutorial Solution
Semester 1 2016

Income tax expense
Dr
Cr
150
Cost of sales
Income tax expense
valuation reserve
Dr
Cr
3 600
Inventory
Dr
Cr
Cr
400
Dr
Dr
Dr
Dr
Dr
Cr
5 000
50 000
12 500
4 200
300
150
1 080
Cr
Share capital
Reserves
Goodwill
Shares in Colin Ltd
Transfer from business combination valn reserve
Plant
Dr
Cr
2 520
120
280
72 000
2 520
2 520
Dr
Cr
Cr
Cr
20 000
Dr
Dr
Cr
1 000
500

Income tax expense
Dr
Cr
Cr
450
Cost of sales
Income tax expense
valuation reserve
Dr
Cr
400
Cr
18 000
600
1 400
1 500
300
150
120
280

Tutorial Solution
Semester 1 2016
Share capital
Reserves
Goodwill
Shares in Colin Ltd
Dr
Dr
Dr
Dr
Dr
Cr
5 000
50 000
12 500
4 200
300
Dr
Cr
2 520

Dr
Cr
280

Income tax expense
Retained earnings
valuation reserve
Dr
Cr
Dr
500
Retained earnings
BCVR
72 000
2 520
280
150
1 050
Cr
Share capital
Reserves
Goodwill
Shares in Colin Ltd
Retained Earnings
BCVR (inv)
1 400
Dr
Dr
Dr
Dr
Dr
Cr
5 000
50 000
12 500
4 200
300
Dr
Cr
2 800
Dr
Cr
1 400
72 000
2 800
1 400

Topic 8 - TutorialSolutions - S1 2016 PDF

Diunggah oleh

Informasi Dokumen

Judul Asli

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

Topic 8 - TutorialSolutions - S1 2016 PDF

Diunggah oleh

Hak Cipta:

Format Tersedia

ACW2491 Company Reporting

A. Pre-acquisition entries at 1 July 2016:

ACW2491 Company Reporting

B. Pre-acquisition entries at 30 June 2017

Worksheet entries at 1 July 2016

Accumulated depreciation - equipment Dr

Worksheet entries at 30 June 2017

ACW2491 Company Reporting

Accumulated depreciation - plant

Deferred tax liability

Transfer from business comb. valuation reserve Dr

1. Worksheet entries at 30 June 2016

ACW2491 Company Reporting

Deferred tax liability

Deferred tax liability

ACW2491 Company Reporting

Transfer from business combination valn reserve

3. Worksheet entries at 30 June 2018

Anda mungkin juga menyukai