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MPA105 Financial Accounting And Reporting

tag 0 Download 7 Pages / 1,736 Words tag 17-11-2020
  • Course Code: MPA105
  • University: Holmesglen Institute
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  • Country: Australia

Question:

On 1 July 2016, Sisters Ltd acquired all of the issued shares of Brothers Ltd for $950 000.  At the acquisition date the equity of Brothers Ltd consisted of:

Share capital

$600 000

Reserves

  120 000

Retained earnings

  150 000

At the date of acquisition this equity reflected the fair values of all the identifiable assets and liabilities of Brothers Ltd.

The following transaction occurred between the two entities during the financial year: 

. On 1 July 2016 Brothers Ltd sold a motor vehicle to Sisters Ltd for $900 000. The motor vehicle had cost Brothers Ltd $1 500 000. It had been used for 5 years and had a carrying amount of $800 000 on Brothers Ltd.’s accounting book on the date of sale. The motor vehicle is recorded under the cost model and the straight-line depreciation method is used by both companies. The remaining useful life of the motor vehicle was estimated to be 5 years.

At 30 June 2017 the directors of Sisters Ltd estimated that purchased goodwill had been impaired by $10 000.

The corporate tax rate is 30%.

The financial statements of Sisters Ltd and Brothers Ltd at 30 June 2017 provided the following information:

 

Sisters Ltd ($000)

Brothers Ltd ($000)

 

Reconciliation of opening and closing retained earnings

 

 

 

 

Sales revenue

30 000 

2 200

 

less Cost of goods sold

(14 000)

( 550)

 

Gross profit

16 000 

1 650 

 

Other income

 

 

 

Gain on sale of fixed asset

 

6 000 

 100

 

                                                                                           

 

 

 

Expenses

 

 

 

Depreciation

(2 000) 

 (400)

 

Other expenses

   (3 800)

(200)

 

Profit before tax

16 200 

1 150 

 

Tax expense (30 % Tax Rate)

   (4 860)

 (345)

 

Profit after tax

11 340

805 

 

Retained earnings—1 July 2016

    6 000 

150 

 

Retained earnings—30 June 2017

 

 

 

17 340

 955

 

 

Sisters Ltd ($000)

Brothers Ltd ($000)

 

 

Statement of financial position

 

 

 

Shareholders’ equity

 

 

Retained earnings - 30 June 2017

17 340

955

Share capital

Reserves

10 000

-

600

120

 

Current liabilities

 

 

 

Tax payable

 

5 600

20

Non-current liabilities

 

 

 

Loans

   4 000

 750

 

36 940

2 445

Current assets

 

 

Cash

Accounts receivable

5 000

7 500

800

335

Inventory/stock

 

6 200

520

Non-current assets

 

 

Land

14 290

320

Vehicles, at cost

3 450

500

Vehicle—accumulated depreciation

(450)

(30)

Investment in Brothers Ltd

   950

       –

 

36 940

2 445

 

 

 

           

Required

Provide the consolidated worksheet of Sisters Ltd and its controlled entity (Brothers Ltd) for the year ended 30 June 2017.

Note: for each of the journal entry you are required to provide an explanation as to why the entry is necessary.

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My Assignment Help. (2020). Financial Accounting And Reporting. Retrieved from https://myassignmenthelp.com/free-samples/mpa105-financial-accounting-and-reporting/value-of-assets-and-liabilities.html.

My Assignment Help (2020) Financial Accounting And Reporting [Online]. Available from: https://myassignmenthelp.com/free-samples/mpa105-financial-accounting-and-reporting/value-of-assets-and-liabilities.html
[Accessed 18 August 2022].

My Assignment Help. 'Financial Accounting And Reporting' (My Assignment Help, 2020) <https://myassignmenthelp.com/free-samples/mpa105-financial-accounting-and-reporting/value-of-assets-and-liabilities.html> accessed 18 August 2022.

My Assignment Help. Financial Accounting And Reporting [Internet]. My Assignment Help. 2020 [cited 18 August 2022]. Available from: https://myassignmenthelp.com/free-samples/mpa105-financial-accounting-and-reporting/value-of-assets-and-liabilities.html.


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