GROUP ASSIGNMENT 3
Note:
•
The submission must be handwritten and converted into a PDF file.
•
50% of the points will be deducted if students do not show detailed workings for figures not
available in the question.
Question 1(30 marks): The condensed financial statements of Father Corporation and Son Ltd. is as
follows.
Condensed Statement of Financial Position on December 31, 2022
Father Corp.
$
Assets
Cash at bank
Receivables
Inventories
Deferred tax assets
Investment in 48,000 $1 shares in S Co at cost of $64,320 (80%)
Property, plant and equipment
Total assets
Liabilies and Equity
Bank overdraft
Payables
Deferred tax liabitities
$1 ordinary shares (share capital)
Retained earnings
Total Liabilities and Equity
Condensed Statement of Profit or Loss on December 31, 2022
Revenue
Cost of sales
Gross profit
Administrative expenses
Profit before taxation
Income taxes
Profit for the year
Son Ltd.
$
34,000
68,000
73,680
4,000
64,320
210,000
454,000
14,600
18,000
34,400
55,000
122,000
10,000
35,000
5,000
200,000
204,000
454,000
20,000
2,000
60,000
40,000
122,000
200,000
55,000
145,000
14,000
131,000
26,200
104,800
80,000
35,000
45,000
8,000
37,000
7,400
29,600
The following additional information affects the preparation of the consolidated financial statements.
•
Father Corp. acquired 80% percent of the outstanding shares of S Ltd. for $64,320 cash on January
1, 2022. At the time of acquisition, the book value of the shareholders' equity of Company S was
$60,000. The balance of S's retained earnings on acquisition date was $10,400. The noncontrolling interest is measured as proportion of net assets.
•
At December 31, 2022, $9,000 of Son's accounts receivable represent amounts payable by Father.
•
During 2022, Father sold merchandise to S for $16,000 and recorded $12,000 as the related cost
of goods sold. 75% of merchandise remains in Son's inventory as of December 31, 2022 (25% of
merchandise were sold out for $10,000).
Require: Prepare the consolidated financial statements at December 31, 2022. Accounting entries are
required.
Question 2 (40 marks): The condensed financial statements of Father Corporation and Son Ltd. is as
follows.
Condensed Statement of Financial Position on December 31, 2022
Father Corp.
$
Assets
Cash at bank
Receivables
Inventories
Deferred tax assets
Investment in 36,000 $1 shares in Son Ltd. at cost of $48,240 (60%)
Property, plant and equipment
Total assets
Liabilies and Equity
Bank overdraft
Payables
Deferred tax liabitities
$1 ordinary shares (share capital)
Retained earnings
Total Liabilities and Equity
Condensed Statement of Profit or Loss on December 31, 2022
Revenue
Cost of sales
Gross profit
Administrative expenses
Profit before taxation
Income taxes
Profit for the year
Son Ltd.
$
34,000
68,000
73,680
4,000
48,240
210,000
437,920
9,600
18,000
34,400
59,000
121,000
10,000
35,000
5,000
200,000
187,920
437,920
20,000
2,000
60,000
39,000
121,000
205,000
75,000
130,000
14,000
116,000
23,200
92,800
85,000
35,000
50,000
8,000
42,000
8,400
33,600
The following additional information affects the preparation of the consolidated financial statements.
•
Father Corp. acquired 60% percent of the outstanding shares of S Ltd. for $48,240 cash on January
1, 2022. At the time of acquisition, the book value of the shareholders' equity of Company S was
$60,000. The balance of S's retained earnings on acquisition date was $5,400. The non-controlling
interest is measured as proportion of net assets.
•
At December 31, 2022, $9,000 of Son's accounts receivable represent amounts payable by Father.
•
During 2022, Son sold merchandise to Father for $16,000 and recorded $12,000 as the related
cost of goods sold. 75% of merchandise remains in Father's inventory as of December 31, 2022
(25% of merchandise were sold out for $10,000).
Require: Prepare the consolidated financial statements at December 31, 2022. Accounting entries are
required.
Question 3 (30 marks): The condensed financial statements of Father Corporation and Son Ltd. is as
follows.
Condensed Statement of Financial Position on December 31, 2022
Assets
Cash at bank
Receivables
Inventories
Deferred tax assets
Investment in 42,000 $1 shares in S Co at cost of $52,400 (70%)
Property, plant and equipment
Total assets
Liabilies and Equity
Bank overdraft
Payables
Deferred tax liabitities
$1 ordinary shares (share capital)
Retained earnings
Total Liabilities and Equity
Condensed Statement of Profit or Loss on December 31, 2022
Revenue
Cost of sales
Gross profit
Administrative expenses
Profit before taxation
Income taxes
Profit for the year
Father Corp.
$
Son Ltd.
$
34,000
68,000
73,680
4,000
52,400
195,350
427,430
9,600
18000
34,400
56,000
118,000
10,000
35,000
5,000
200,000
177,430
427,430
20,000
2,000
60,000
36,000
118,000
205,000
75,000
130,000
14,000
116,000
23,200
92,800
88,000
35,000
53,000
8,000
45,000
9,000
36,000
The following additional information affects the preparation of the consolidated financial statements.
•
Father Corp. acquired 70% percent of the outstanding shares of Son Ltd. for $52,400 cash on
January 1, 2022. At the time of acquisition, the book value of the shareholders' equity of Son Ltd,
was $60,000 with no retained earnings. On 1 January 2022, the fair value of equipment was $2,000
higher than book value in Son Ltd. because of the revaluation in property, plant and equipment.
The remained useful life of non-current assets is 5 years. Son Ltd. has not incorporated any
revaluation in its books of account.
•
The non-controlling interest is measured as proportion of net assets.
•
At December 31, 2022, $8,000 of Son's accounts receivable represent amounts payable by Father.
•
During 2022, Son sold merchandise to Father for $16,000 and recorded $12,000 as the related
cost of goods sold. None of that merchandise remains in Father's inventory as of December 31,
2022 (They were sold out for $20,000).
Require: Prepare the consolidated financial statements at December 31, 2022. Accounting entries are
required.