ACCT3007-Corporate Accounting System - Accounting and Finance Assignment Help

Assignment Task

Task

Part A:

Step 1: Read the following scenario:

Wholesale Ltd acquired SO per cent of the shares of House Construction Ltd on 30 June 2020 for a consideratioi of 5300,000_ The share capital and reserves of House Construction Ltd at the dale of acquisition were:

• Share capital $550,000
• Retained earnings $100.000
• Revaluation surplus $150.000.

All assets of House Construction Ltd were fairly valued at the date of acquisition, except for a major plant that hr a fair value $26,000 greater than its carrying amount The cost of the plant was $100,000 and it had accumulate' depreciation. of $85,000_ There were no
transactions between Wholesale Ltd and House Construction Ltd at the date of acquisition. In addition, Who lest Ltd acquired 100 per cent of the shares of Queensland Retail Ltd on 1 July 2018—that is two years earlier_ The cc of investment was $650,000. At that date the capital and reserves of Queensland Retail Ltd were;

• Share capital $235,000
• Retained earnings $115.000.

At the date of acquisition, all assets of Queensland Retail Ltd were considered to be fairly valued_ Wholesale lid incurred the following transactions with Queensland Retail Ltd during the financial year 2018-2019:

• On 1 September 2018 Wholesale Ltd sold machinery to Queensland Retail Ltd for $136.000 when its carryin  value in Wholesale Ltd's book was $100,000 (original cost $200,000 and original estimated life of Ei years).
• From January to June in 2019, Wholesale Ltd made sales of inventory 550,000 to Queensland Retail Ltd for c sale to external parties_ The inventory had originally cost Wholesale Ltd $40,00€1_ On 30 June 2019, Queensland Retail Ltd still had 40 per cent of the inventory on hand_ On-hand inventory was expected to be sold in the subsequent financial year.

Wholesale Ltd incurred the following transactions with Queensland Retail Ltd during the financial year 2019-20:

• During the year Wholesale Ltd made total sales of inventory $70,000 to Queensland Retail Ltd for on-sale to external parties_ The inventory had originally cost Wholesale Ltd 61,000. On 30 June 2020, half of the inventory was still on hand_ On-hand inventory was expected to be sold in the subsequent financial year.
• Wholesale Ltd provided management consultation to Queensland Retail Lid and this was the first time that Wholesale Ltd provided such service to Queensland Retail Ltd. At the end of 2020, Queensland Retail Ltd pai $3,000 for these services and has a balance of $2,000 payable at year-end.
• Queensland Retail Ltd has several long-term loans, including a five-year loan for $55,000 from Wholesale Ltd This loan was effective from 1 July 2019_ The interest rate was 3.5% per annum. During the year ending 30 June 2020, Queensland Retail Ltd paid $1,000 interest on this loan.

Step 2: Based on the scenario, prepare the following:

You were appointed as the financial accountant at Wholesale Ltd. As you may have noticed, Wholesale Ltd acquired 80% shares of House Construction Ltd to extend its operation in Australia and it also has an existing wholly-owned subsidiary (Queensland Retail Ltd) operating in Queensland.

You were requested to prepare the following:

I. Acquisition analysis at 1 July 2018 and adjustment/elimination journal entries for consolidation as of 30 Jur 2019
II. acquisition analysis and adjustment/elimination journal entries for consolidation as of 30 June 2020.

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