ACCT3004: Company Accounting - Dean Ltd Case Study - Accounting Assignment Help

Assignment Task:

Question 1: Consolidations 1 

On 1 July 2022, Dean Ltd acquired the remaining 80% of the issued shares of Lewis Ltd for shares in Dean Ltd with a fair value of $1 000 000. At that date, the financial statements of Lewis Ltd showed the following information.

All the assets and liabilities of Lewis Ltd were recorded at amounts equal to their fair values at the acquisition date, except some equipment recorded at $50 000 below its fair value with a related accumulated depreciation of $80 000. Assume the equipment has not been revalued in the subsidiaries accounts. Also, Dean Ltd identified at acquisition date a contingent liability related to a lawsuit where Lewis Ltd was sued by a former supplier and attached a fair value of $40 000 to that liability. The previous held interest by Dean Ltd in Lewis Ltd (ie 20% of the issued shares) was recognised by in Dean Ltd.’s accounts at the fair value at acquisition date of $250 000. Dean Ltd incurred $15 000 in acquisition related costs including $10 000 in share issue costs.

The Company tax rate is 30%.

Required

1. Prepare the acquisition analysis in good format at 1 July 2022. (10 marks)

2. Prepare the consolidation worksheet journal entries for Dean Ltd.’s group at 1 July 2022, assuming that Lewis Ltd has not revalued the equipment in its own accounts.

3. Complete the BCVR ledger account as at 1 July 2022.

Question 2: Consolidations 2 (25 marks)

1. Aladdin Ltd owns all of the share capital of Genie Ltd. The income tax rate is 30%. The following transactions took place during the periods ended 30 June 2019 or 30 June 2020.

2. In January 2020, Aladdin Ltd sells inventories to Genie Ltd for $15 000 in cash. These inventories had previously cost Aladdin Ltd $10 000, and remain unsold by Genie Ltd at the end of the period. (3 marks)
3. In February 2020, Aladdin Ltd sells inventories to Genie Ltd for $17 000 in cash. These inventories had previously cost Aladdin Ltd $12 000, and are on-sold externally on 2 April 2020. (2 marks)
4. In February 2020, Genie Ltd sells inventories to Aladdin Ltd for $22 000 in cash (original cost to Genie Ltd was $16 000) and half are on-sold externally by 30 June 2020. (3 marks)
5. In March 2020, Aladdin Ltd sold inventories for $10 000 to Zara Ltd, an external entity. These inventories were transferred from Genie Ltd on 1 June 2019. The inventories had originally cost Genie Ltd $6000, and were sold to Aladdin Ltd for $12 000. (2 marks)

Required

In relation to the above intragroup transactions, prepare adjusting journal entries for the consolidation worksheet at 30 June 2020. Only the adjusting entries need be shown.

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