What is the Impact of Financial Accounting and the Impact on Decision Maker Texas.
- Calculate the acquisition analysis?
- Prepare the consolidation worksheet entries for the preparation by Zack Ltd of its consolidated financial?
Prepare a statement of profit or loss and other comprehensive income for Black Hole Ltd for the year ended according to the requirements of AASB 101 .
Prepare a statement of financial position for Black Hole Ltd as to comply with AASB 101.
Prepare a statement of changes in equity for Black Hole Ltd for the year ended according to the requirements of AASB 101.
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Acquisition Analysis as at 1 July, 2015 |
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Net fair value of identifiable assets and liabilities of Zack Ltd. |
||
|
Share Capital |
1,50,000 |
|
|
General Reserve |
34,000 |
|
|
Retained Earnings |
20,000 |
|
|
Land ((155000-150000)*(1-30%)) |
3,500 |
|
|
Plant ((190000-175000)*(1-30%)) |
10,500 |
|
|
Inventory ((40000-32000)*(1-30%)) |
5,600 |
|
|
Provision for damages (8000*(1-30%)) |
(5,600) |
|
|
Recorded Goodwill |
(2,000) |
|
|
Net Fair Value |
2,16,000 |
|
|
Consideration given |
2,27,500 |
|
|
Goodwill |
11,500 |
|
|
Goodwill already recorded |
2,000 |
|
|
Net goodwill to be recorded |
9,500 |
|
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Consolidation Worksheet entries as on 30 June, 2016 |
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1. Business Combination Valuation Entries |
||
|
Land |
Dr. |
5,000 |
|
To Deferred Tax Liability |
Cr. |
1,500 |
|
To Business Combination Valuation Reserve |
Cr. |
3,500 |
|
(Being Land fair valued) |
||
|
Inventory |
Dr. |
8,000 |
|
To Deferred Tax Liability |
Cr. |
2,400 |
|
To Business Combination Valuation Reserve |
Cr. |
5,600 |
|
(Being Inventory fair valued) |
||
|
Accumulated Depreciation - Plant |
Dr. |
25,000 |
|
To Plant |
Cr. |
10,000 |
|
To Deferred Tax Liability |
Cr. |
4,500 |
|
To Business Combination Valuation Reserve |
Cr. |
10,500 |
|
(Being Plant fair valued) |
||
|
Depreciation |
Dr. |
5,000 |
|
To Accumulated depreciation |
Cr. |
5,000 |
|
(Being depreciation recorded) |
||
|
Deferred tax liability |
Dr. |
1,500 |
|
To Income tax expense |
Cr. |
1,500 |
|
(Being income tax expense on depreciation recorded) |
||
|
Cost of sales |
Dr. |
7,200 |
|
To Income tax expense |
Cr. |
2,160 |
|
To Transfer from business combination valuation reserve |
Cr. |
5,040 |
|
(Being 90% sale of inventory recorded) |
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|
Accumulated impairment loss |
Dr. |
12,000 |
|
To Goodwill |
Cr. |
2,500 |
|
To Business combination valuation reserve |
Cr. |
9,500 |
|
(Being impairment of goodwill recorded) |
||
|
Business combination valuation reserve |
Dr. |
1,400 |
|
Deferred tax asset |
Dr. |
600 |
|
To Provision for damages |
Cr. |
2,000 |
|
(Being provision for damages recorded) |
||
|
Transfer from Business combination valuation reserve |
Dr. |
4,200 |
|
Income tax expense |
Dr. |
1,800 |
|
To Gain on reversal of provision of damages |
Cr. |
6,000 |
|
(Being reversal of excess provision of damags recorded earlier reversed) |
||
|
2. Pre-Acquisition Entries |
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|
Share Capital |
Dr. |
1,50,000 |
|
General Reserve |
Dr. |
34,000 |
|
Retained Earnings (01.07.2015) |
Dr. |
20,000 |
|
Business Combination Valuation Reserve |
Dr. |
23,500 |
|
To Shares in Cathy Ltd. |
Cr. |
2,27,500 |
|
(Being purchase of shares of William Ltd. Recorded) |
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Worksheet entries as on 30 June, 2016 |
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|
1. Business Combination Valuation Entries |
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|
The entries on 30 June, 2016 are effected by: |
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- sale of inventory |
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- remeasurment of provision of damages |
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- transfer from general reserve to retained earnings |
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|
- call of 10c per shares on issued shares |
||
|
Transfer from business combination valuation reserve |
Dr. |
5,040 |
|
To Business Combination Valuation Reserve |
Cr. |
5,040 |
|
(Being sale of inventory recorded) |
||
|
Transfer from business combination valuation reserve |
Dr. |
4,200 |
|
To Business Combination Valuation Reserve |
Cr. |
4,200 |
|
(Being remeasurement of provision for damages recorded) |
||
|
General Reserve |
Dr. |
17,000 |
|
To Retained earnings |
Cr. |
17,000 |
|
(Being amount transferred) |
||
|
Share capital |
Dr. |
10,000 |
|
To Shares in William Ltd. |
Cr. |
10,000 |
|
(Being share money called by William Ltd.) |
-
Statement of Profit or Loss
|
Black Hole Ltd. |
||
|
STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME |
||
|
For the year ended on June 30, 2018 |
||
|
(Amount in $) |
||
|
Particulars |
Notes |
For the year ended on |
|
Income from operations |
||
|
Sale of product |
8,25,000 |
|
|
Cost of sales |
(4,50,000) |
|
|
Gross Profit |
3,75,000 |
|
|
Other income |
14 |
6,000 |
|
Administration expenses |
(2,36,300) |
|
|
Other expenses |
(10,000) |
|
|
Interest expense |
(28,700) |
|
|
Profit before tax |
1,06,000 |
|
|
Less: Tax expense |
(50,400) |
|
|
Profit for the year |
55,600 |
|
|
Other comprehensive income |
||
|
Items that will not be classified to profit or loss: |
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|
Gain on Revaluation of assets |
15 |
55,000 |
|
Income tax expense on OCI |
(16,500) |
|
|
Other comprehensive income for the year (net of tax) |
38,500 |
|
|
Total comprehensive income for the year |
94,100 |
|
|
Black Hole Ltd. |
||
|
Notes to the Financial Statements |
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|
For the year ended on June 30, 2018 |
||
|
Note - 1: Cash and cash equivalents |
||
|
Particulars |
Amount |
|
|
Cash at bank |
500 |
|
|
Total |
500 |
|
|
Note - 2: Trade and other receivables |
||
|
Particulars |
Amount |
|
|
Accounts receivable |
58,000 |
|
|
Allowance for doubtful debts |
(12,800) |
|
|
Total |
45,200 |
|
|
Note - 3: Inventories |
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|
Particulars |
Amount |
|
|
Inventories |
87,700 |
|
|
Total |
87,700 |
|
|
Note - 4: Other current assets |
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|
Particulars |
Amount |
|
|
Prepaid Insurance |
7,000 |
|
|
Total |
7,000 |
|
|
Note - 5: Property, plant & equipment - Tangible assets |
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|
Particulars |
Amount |
|
|
Land |
||
|
- cost |
2,20,000 |
|
|
Buildings |
||
|
- cost |
3,80,000 |
|
|
Plant and equipment |
||
|
- cost |
2,22,500 |
|
|
- accumulated dep |
(42,500) |
1,80,000 |
|
Total |
7,80,000 |
|
|
Note - 6: Property, plant & equipment - Intangible assets |
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|
Particulars |
Amount |
|
|
Goodwill |
||
|
- cost |
1,05,000 |
|
|
- accumulated impairment loss |
(10,000) |
95,000 |
|
Total |
95,000 |
|
|
Note - 7: Borrowings |
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|
Particulars |
Amount |
|
|
Current portion of mortgage loans |
50,000 |
|
|
Current portion of debentures |
80,000 |
|
|
Bank overdraft (at call) |
69,200 |
|
|
Total |
1,99,200 |
|
|
Note - 8: Trade and other payables |
||
|
Particulars |
Amount |
|
|
Accounts payable |
69,500 |
|
|
Total |
69,500 |
|
|
Note - 9: Current tax liability |
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|
Particulars |
Amount |
|
|
Current tax liability |
52,100 |
|
|
Total |
52,100 |
|
|
Note - 10: Current provisions |
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|
Particulars |
Amount |
|
|
Provision for employee benefits |
||
|
Annual leave |
18,000 |
|
|
Total |
18,000 |
|
|
Note - 11: Other liabilities |
||
|
Particulars |
Amount |
|
|
Dividend payable |
10,000 |
|
|
Interest payable |
2,800 |
|
|
Total |
12,800 |
|
|
Note - 12: Non-current Borrowings |
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|
Particulars |
Amount |
|
|
Mortagage Loans |
2,50,000 |
|
|
Less: Current portion of mortgage loans |
(50,000) |
2,00,000 |
|
7% debentures |
80,000 |
|
|
Less: Current portion of debentures |
(80,000) |
- |
|
Total |
2,00,000 |
|
|
Note - 13: Non-current Provisions |
||
|
Particulars |
Amount |
|
|
Provision for employee benefits |
||
|
Long-service leave |
16,200 |
|
|
Total |
16,200 |
|
|
Note - 14: Other Income |
||
|
Particulars |
Amount |
|
|
Interest revenue |
2,500 |
|
|
Dividends revenue |
3,500 |
|
|
Total |
6,000 |
|
|
Note - 15: Gain on Revaluation of assets |
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|
Particulars |
Amount |
|
|
Gain on Revaluation of Land |
25,000 |
|
|
Gain on Revaluation of Building |
30,000 |
|
|
Total |
55,000 |
|
|
Black Hole Ltd. |
||
|
STATEMENT OF FINANCIAL POSITION |
||
|
For the year ended on June 30, 2018 |
||
|
(Amount in $) |
||
|
Particulars |
Notes |
As at |
|
Current assets |
||
|
Cash and cash equivalents |
1 |
500 |
|
Trade and other receivables |
2 |
45,200 |
|
Inventories |
3 |
87,700 |
|
Other current assets |
4 |
7,000 |
|
Total current assets |
1,40,400 |
|
|
Non-current assets |
||
|
Property, plant and equipment |
||
|
- Tangible assets |
5 |
7,80,000 |
|
- Intangible assets |
6 |
95,000 |
|
Deferred tax assets |
9,800 |
|
|
Total non-current assets |
8,84,800 |
|
|
Total assets - (a) |
10,25,200 |
|
|
Current liabilities |
||
|
Borrowings |
7 |
1,99,200 |
|
Trade and other payables |
8 |
69,500 |
|
Current tax liabilities |
9 |
52,100 |
|
Provisions |
10 |
18,000 |
|
Other liabilities |
11 |
12,800 |
|
Total current liabilities |
3,51,600 |
|
|
Non-current liabilities |
||
|
Borrowings |
12 |
2,00,000 |
|
Provisions |
13 |
16,200 |
|
Deferred tax liability |
18,400 |
|
|
Total non-current liabilities |
2,34,600 |
|
|
Total liabilities - (b) |
5,86,200 |
|
|
Net assets (a-b) |
4,39,000 |
|
|
Equity |
||
|
Contributed equity |
2,00,000 |
|
|
Retained earnings |
1,29,000 |
|
|
Revaluation reserves |
85,000 |
|
|
General reserve |
25,000 |
|
|
Total equity |
4,39,000 |
|
|
Black Hole Ltd. |
|||||
|
Statement of Changes in Equity |
|||||
|
For the year ended on June 30, 2018 |
|||||
|
Particulars |
Share Capital |
Retained Earnings |
Revaluation Surplus |
General Reserve |
Total |
|
Balance as at 1 July, 2017 |
1,00,000 |
1,28,400 |
46,500 |
- |
2,74,900 |
|
Profit for the year |
55,600 |
55,600 |
|||
|
Other comprehensive income |
38,500 |
38,500 |
|||
|
Total comprehensive income for the year |
|||||
|
Shares issued during the year |
1,00,000 |
1,00,000 |
|||
|
Transfer to general reserve |
(25,000) |
25,000 |
- |
||
|
Transactions with owners in their capacity as owners: |
|||||
|
- dividends paid |
(20,000) |
(20,000) |
|||
|
- dividends provided for |
(10,000) |
(10,000) |
|||
|
Balance as at June 30, 2017 |
2,00,000 |
1,29,000 |
85,000 |
25,000 |
4,39,000 |
References
Porter, G & Norton, C 2014, Financial Accounting: The Impact on Decision Maker, Texas: Cengage Learning
Shah, P 2013, Financial Accounting, London: Oxford University Press
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