UNIVERSITY OF WESTERN SYDNEY
200109 Corporate Accounting Systems
Consolidated Financial Statements with Non-Controlling Interests
Assignment – spring 2013
INSTRUCTIONS
1. 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 |
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|
A.Journal entries: |
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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 |
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|
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 |
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B.Consolidation Worksheet and Non-Controlling Interest Calculation: |
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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 |
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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 |
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C.Consolidated Financial Statements |
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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 |
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|
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 |
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STUDENT ID: STUDENT NAME: TOTAL MARK: / 20 |
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[NOTE: Errors flowing from earlier incorrect journals, etc will not be treated as further errors]
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