6201 – Financial Accounting
Consolidations Exercise Three
On 1 April 20X1 A Ltd purchased all the shares in B Ltd for $320,000 cash, when B Ltd’s
equity was:
Issued and Paid in Capital (450,000 shares)
Retained Earnings
Other reserves
250,000
45,000
5,000
$300,000
On 1 April 20X2, A Ltd sold equipment as part of its trading operations to B Ltd for $60,000
at a mark up of 20% on cost. B Ltd continues to hold the equipment as a non-current asset
in its books, depreciating it at 10% p.a. on cost.
During the year ended 31 March 20X4 B Ltd sold A Ltd goods for $20,000 which had been
marked up by 331/3 on cost. $4,000 worth of these goods was still on hand at year end.
During the year ended 31 March 20X4 B Ltd paid A Ltd management fee of $30,000.
At 31 March 20X4, goodwill on acquisition is considered to be impaired by $9,000.
Required:
Notional consolidation Journal entries for the year ended 31 March 20X4.
Complete the consolidation worksheet for the year ended 31 March 20X4.
6201 – Financial Accounting
Consolidation Worksheet
for the year ended 31 March 20X4
A Ltd
Income Statement section of SCI
Sales
Less Cost of Sales
Gross Profit
Plus Dividends Received
Management Fee Received
Less Expenses
Net Profit Before Tax
Less Tax Expense
Net Profit After Tax
Retained Earnings B/fwd
Net Profit After Tax
Less Dividend Paid
Retained Earnings C/fwd
Statement of Financial Position
Equity
Issued and Paid in Capital
Retained Earnings
Other Reserves
Asset Revaluation Surplus
Liabilities
Bank Overdraft
Tax Payable
Other Liabilities
Assets
Property, Plant & Equipment (net)
Shares in B Ltd
Trade and other receivables
Inventory
B Ltd
$000’s
1,770
1,130
640
25
30
695
440
255
75
180
$000’s
560
295
265
265
225
40
15
25
80
180
260
100
160
70
25
95
25
70
800
160
110
85
1,155
250
70
5
325
75
15
125
80
10
40
1,370
455
420
320
295
335
300
85
70
1,370
455
Consolidation
Journals
DR
CR
$000s
$000’s
Consol.
Statements
$000’s