B407F Week 6 Tutorial worksheet

B407F Week 6 Tutorial worksheet - B407F Week 6 Tutorial...

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B407F Week 6 Tutorial Solution -Consolidated Statement of Income (I) Question 1 (i) Consolidation Journal Entries Debit Credit $000 $000 1. Share capital - Scott Ltd Retained earnings - Scott Ltd at acquisition date Goodwill Investment in Scott Ltd Non-controlling interest (W1-Elimination of investment in subsidiary) 2. Gain on disposal of non-current assets Plant and Equipment Depreciation expenses (W2-Elimination of inter-company sale of non-current depreciable assets) 3. Sales Cost of sales (purchases) Cost of sales (closing inventories) Inventories (Statement of financial position) (W3 – Elimination of inter-company sale of inventory) 4. Other Income (Dividend income) NCI Dividend paid (W4 – Elimination of inter-company dividend) 5. Consolidated income statement Non-controlling interest (W5 NCI's share of post acquisition profits of Scott Ltd) 6. Impairment of goodwill Goodwill Being accounting for the impairment loss of goodwill 1
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Workings $000 1. PPE (Net book value) - Hamburg Ltd - Scott Ltd Less: Adjustment for gain on disposal of equipment (w1a) Add: Adjustment for overstated dep. of equip (w1b) Consolidated amount for PPE W1a Original cost of equipment Less: Acc. depreciation at 1 Jan 2009 Carrying amount at 1 Jan 2009 Selling price Gain on disposal of equipment W1b Depreciation based on selling price Depreciation based on original cost Depreciation overprovided 2. Inventory - Hamburg Ltd - Scott Ltd Less: Unrealized profit on stock Consolidated amount for the inventory 3 Goodwill arising on consolidation: $000 Cost of investment Equity shares Scott Pre-acquisition reserves Goodwill Impairment 2
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4 Non-controlling interest in Scott $000 NCI at acquisition Retained earnings Less: gain on disposal Add: excess depreciation
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B407F Week 6 Tutorial worksheet - B407F Week 6 Tutorial...

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