Week10_Discussion_Question_Solutions

Week10_Discussion_Question_Solutions - Week 10 Discussion...

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Week 10 Discussion Questions In the tax-effect versions of the solutions to practical questions, it is assumed that the tax rate is 30%. The tax effect versions are numbered 21.00t. Unlike chapters 18 to 20, because it is assumed that students are now proficient with the application of tax-effect accounting to the consolidation process, detailed explanations are not provided.
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Consolidated financial statements at control date (a) Consolidated balance sheet at control date Consolidation worksheet at 1 April 20X4: Balance sheet Winton Corris Jolley Data adjustments Sum Eliminations Group Allocation to shareholders Dr Cr Dr Cr NCI Parent Paid-up capital 1 600 800 1 200 3 600 560 1 660 2 2 380 780 1 600 Reserves 400 500 270 at/ a 900 1 530 791 1 739 339 400 Retained profits 510 100 (280) 330 70 1/2 154 414 (96) 510 Owners’ equity 2 510 1 400 920 5 460 3 533 1 023 2 510 Deferred tax liability at 270 270 270 Total equities 2 510 1 400 920 5 730 3 803 Investment in Corris 1 800 1 800 1 1 800 Investment in Jolley 550 550 2 550 Consolidation goodwill 379 1 44 2 423 Other net assets 160 1 400 920 900 a 3 380 3 380 Net assets 2 510 1 400 920 1 170 1 170 5 730 2 504 2 504 3 803 Adjustment a: Adjusts Corris’s assets to their fair value ($2 300 – $1 400) Adjustment at: Recognises the tax effects (deferred tax expense and DTL) of the difference between group CA and CA that occur by adjusting other net assets, to control date fair value (30% of x $900). The deferred tax expense is debited to the fair value reserve since the associated asset increment is credited to that reserve. Elimination 1:
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Week10_Discussion_Question_Solutions - Week 10 Discussion...

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