200109 Corporate Accounting Systems
Consolidated Financial Statements with Non-Controlling Interests
Assignment spring 2013
INSTRUCTIONS
1. The assignment is to be submitted as an individual attempt. It must be prepared using Excel spreadsheet and be entirely your own work from this semester i.e. do not use or copy any file, in whole or in part, from any previous semester or from any other student. Create a NEW EXCEL FILE for this assignment and use your student number as the file name.
2. Marking guidecan be found as the last page of this assignment question file.Print this page and complete. Use the marking guide sheet to see what is expected and how your work will be marked. Significant emphasis is placed on the correctness of the journal entries so ensure you spend adequate time on these. Review your work before submission and consider how well have met the expected standards (performance levels) for the criteria identified.
3. After handing in the printed copy, the excel file must be uploaded to vUWS using TURNITIN.Further instructions on this process will be provided on vUWS closer to the due date. The excel file MUST EXACTLY MATCH the printed version and not be modified after the submitted version was printed. Uploading a file that doesnt match exactly, or failing to upload the excel file on time, will result in a significant penalty!The file will be checked against other students submissions for potentialplagiarism.
4. Marks will be deducted for poor quality presentation, for incorrect work, and for missing work. The presentation of the financial statements must the format of the examples and end-of-chapter exercise in chapter 29 of the textbook.
QUESTION
Using the information below and the financial statements on the following page, prepare the following at 30 June 2013:
A. adjustment/elimination journal entries for consolidation (10 marks); and
B. consolidation worksheet and detailed calculation of non-controlling interest balance (5 marks); and
C. consolidated financial statements and statements of changes in equity of Platypus Limited and its controlled entities (5 marks).
INFORMATION
1. On 1 January 2007 Platypus Ltd purchased 100% of the issued capital of Emu Ltd for $650,000 cash. On acquisition Emu Ltd accounts showed: Share capital $700,000 and Retained earnings $159,000. All assets and liabilities were recorded at fair value except for land that was undervalued by $80,000.
2. On 1 July 2008 Platypus Ltd and Emu Ltd each acquired 35% of the issued capital of Koala Ltd for a combined total of $400,000 cash. The balance sheet of Koala Ltd at the acquisition date showed: Share capital $250,000 and Retained earnings $56,000. All assets and liabilities were recorded at fair value except for an item of plant that was undervalued by $30,000. At that time the plant had a remaining life of 6 years and accumulated depreciation of $24,000. The plant was still on hand at 30 June 2013.
For the year ended 30 June 2013:
3. On 1 July 2012 Koala Ltd sold an item of plant to Emu Ltd for $72,750 when its carrying value in Koalas books was $69,000 (original cost $110,400 and original estimated life of 12 years).
4. The opening inventory on 1 July 2012 in Platypus Ltd included stock of $29,000 acquired from Emu Ltd.
5. During the year Emu Ltd made sales of inventory to Koala Ltd of $116,000, while Koala Ltd sold $184,000 of inventory to Platypus Ltd.
6. Closing inventories on 30 June 2013 included the following: Platypus Ltd $55,000 (bought from Koala Ltd) and Koala Ltd $28,000 (bought from Emu Ltd).
7. Platypus Ltd charged management fees to both Emu Ltd and Koala Ltd. Emu Ltd also charged management fees to Koala Ltd.
8. Dividends were declared/paid by the three companies.
AT 30 JUNE 2013
PLATYPUS LTD
EMU LTD
KOALA LTD
$
$
$
INCOME STATEMENTS
Sales revenue
1,413,500
978,300
777,100
Cost of goods sold
798,000
538,060
427,400
Gross profit
615,500
440,240
349,700
Other income
Management fee revenue
22,600
21,000
–
Dividend revenue
222,750
36,750
–
Gain on sale of plant
–
–
3,750
Expenses
Depreciation expense
(126,200)
(49,000)
(93,700)
Management fee expense
–
(12,600)
(31,000)
Other expenses
(326,100)
(263,800)
(221,400)
Profit before tax
408,550
172,590
7,350
Income tax expense
(127,200)
(50,050)
(2,400)
Profit for the year after tax
281,350
122,540
4,950
Retained earnings at start of year
659,100
434,000
243,900
Dividend paid/declared
(250,000)
(186,000)
(105,000)
Retained earnings at year end
690,450
370,540
143,850
BALANCE SHEETS
Equity
Share capital
850,000
700,000
250,000
Retained earnings
690,450
370,540
143,850
Current Liabilities
Accounts payable
184,000
71,010
114,750
Income tax payable
125,900
66,700
2,600
Dividends payable
125,000
50,000
55,000
Provision for employee benefits
19,200
15,700
12,900
Non-Current Liabilities
Loans
675,100
175,100
645,000
Provision for employee benefits
21,900
19,400
14,100
Deferred tax liability
6,900
9,700
–
2,698,450
1,478,150
1,238,200
Current Assets
Accounts receivable
276,300
104,100
110,800
Allowance for doubtful debts
(15,500)
(7,000)
(4,200)
Dividends receivable
69,250
19,250
–
Inventory
112,100
144,200
75,900
Non-Current Assets
Land and buildings
800,000
610,800
652,000
Plant at cost
901,200
601,200
699,600
Accumulated depreciation plant
(294,900)
(194,400)
(297,600)
Deferred tax asset
–
–
1,700
Investment in Emu Ltd
650,000
–
–
Investment in Koala Ltd
200,000
200,000
–
2,698,450
1,478,150
1,238,200
9. Non-controlling interests to be recognised.
10. Platypus Ltd has the following accounting policies which have been in place for the group for many years: (i) Revaluation adjustments on acquisition are to be made on consolidation only, not in the books of the subsidiary; (ii) Non-controlling interest is measured at fair value; (iii) Intragroup sales of inventory to be at a markup of 25% on cost; (iv) Plant is depreciated straight-line over its estimated life, with no residual value; and (v) all amounts to be recorded to the nearest whole dollar.
11. The company tax rate is currently 30% and it has been this rate for many years.
NOTE:
· You MUST number journal entries as they relate to the point numbers given in the information below. Where more than one journal is needed, add the letters a,b,c, etc to them. That is, if two journals are required to record the acquisition detailed in information point 1, then the first journal will be 1a and the second is 1b. Short narrations are expected for each journal entry.
· The consolidated statements required for both the group and the parent company are: the statement of comprehensive income, statement of financial position, and statement of changes in equity. Notes to the statements are not required.
· You may cut and paste the financial information on the next page into your excel file, but no other information is to be copied into your file.
Plagiarism, Cheating & Collusion
Plagiarism, cheating or collusion is regarded as a serious breach of the University’s academic standards. Students must carefully read the Academic Rules on Plagiarism, Cheating & Collusion. Refer to the School of Accounting Handbook for further details
RULES WILL BE STRICTLY ENFORCED
200109 CORPORATE ACCOUNTING SYSTEMS ASSIGNMENT MARKING CRITERIA & STANDARDS SPRING 2013
CRITERIA
UNSATISFACTORY
BELOW EXPECTATIONS
MEETS MINIMUM EXPECTATIONS FOR A PASS
EXCEEDS MINIMUM EXPECTATIONS
SIGNIFICANTLY EXCEEDS EXPECTATIONS
A. Journal entries:
Correctness/completeness
of journals
Four or more events not correctly recorded and/or missing and/or included incorrectly
? 0 marks
Three events not correctly recorded and/or missing and/or included incorrectly
? 3 marks
Two events not correctly recorded and/or missing and/or included incorrectly
? 5 marks
One event not correctly recorded and/or missing and/or included incorrectly
? 7 marks
Every required journal is correct, with none missing or included incorrectly
? 9 marks
Presentation, numbering and
narrations
Three or more journals are not presented clearly and/or not complete and/or not numbered correctly
? 0 marks
One or two journals not presented clearly and/or not complete and/or not numbered correctly
? ½ mark
All journals are presented clearly and numbered correctly. All narrations are complete and informative
? 1 mark
B. Consolidation Worksheet and Non-Controlling Interest Calculation:
Consolidation Worksheet
Poor presentation and/or not balanced due to errors and/or missing entries
? 0 marks
Not clearly presented but does balance.
? 1 mark
Clearly presented. No errors and/or missing entries
? 2 marks
Non-Controlling Interest Summary Calculation
Three or more errors and/or not reconciled to the Balance Sheet
? 0 marks
Two errors but is reconciled to the Balance Sheet
? 1 mark
One error but is reconciled to the Balance Sheet
? 2 marks
Information is presented well, no errors and reconciled to the Balance Sheet
? 3 marks
C. Consolidated Financial Statements
Presentation of Comprehensive Income Statements & Balance Sheets
(for both Group and Parent)
Poor presentation and/or more than three errors and/or missing headings or amounts
? 0 marks
Not acceptably presented and/or three errors and/or missing headings or amounts
? ½ mark
Acceptably presented, but with two errors and/or missing headings or amounts
? 1½ marks
Acceptably presented, but with one error and/or missing heading or amount
? 2 marks
Correctly presented. No errors and/or missing headings or amounts
? 3 marks
Statements of Changes in Equity (for both Group and Parent)
One or more errors and/or not reconciled to the Balance Sheet
? 0 marks
Information could be presented more clearly but is reconciled to the Balance Sheet
? 1 mark
Information is clearly presented and reconciled to the Balance Sheet
? 2 marks
STUDENT ID: STUDENT NAME: TOTAL MARK: / 20
[NOTE: Errors flowing from earlier incorrect journals, etc will not be treated as further errors]