Consolidated Financial Statements with Non-Controlling Interests

 

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 doesn’t 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 Koala’s 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]