ACT305 - Corporate Accounting - Bolan Ltd - Accounting Assignment Help

ACT305: Corporate Accounting Assignment Help

Assignment Task:

Additional information

(a) Bolan Ltd recognised the final dividend revenue from Rex Ltd before receipt of cash. Rex Ltd declared a $14 400 dividend in June 2019, this being paid in August 2019.

(b) On 31 December 2019, Rex Ltd sold Bolan Ltd a motor vehicle for $28 800. The vehicle had originally cost Rex Ltd $43 200 and was written down to $21 600 for both tax and accounting purposes at the time of sale to Bolan Ltd. Both companies depreciated motor vehicles at a rate of 20% p.a. on cost.

(c) The beginning inventory of Rex Ltd included goods at $9 600 bought from Bolan Ltd; their cost to Bolan Ltd was $7 680.

(d) The ending inventory of Bolan Ltd included goods purchased from Rex Ltd at a profit before tax of $3 840.

(e) The tax rate is 30%

Required

Prepare the consolidation worksheet JOURNAL ENTRIES for the preparation of consolidated financial statements by Ormolu Ltd at 30 June 2019. Note a consolidation worksheet is NOT required. Your answer should include an acquisition analysis with a calculation of goodwill/gain on bargain purchase, business combination valuation entries, pre-acquisition entries, the NCI share of equity at acquisition date, from acquisition date to the beginning of the year of consolidation, and for the year of consolidation, dividend adjustments, intragroup sales, and asset disposals.

Question 4. George Ltd acquired 60% of the shares of Orwell Ltd in February 2017. Although George Ltd has 100% subsidiaries this is the first acquisition that George Ltd has made with a non-controlling interest (NCI) partly funding the other company. Eric Blair, the financial accountant of George Ltd has asked you to write a report advising him as to the best approach he should take when he prepares the consolidated financial statements for the Orwell Group of companies. As he has never had to calculate the share of the equity in Orwell Ltd funded by the NCI he is worried about how he should calculate it. He is especially interested in how the calculation should take place in the years after the acquisition date. He tells you that some of his colleagues in other companies have mentioned a ‘step’ approach which apparently makes accounting for the accounting periods after the date of acquisition very easy as it is then necessary to prepare only one step. Required Prepare a report for Eric, explaining the step approach to the calculation of NCI and the effects of this approach in the years after the date of acquisition. (5 marks) The report should take the format of a formal business report, written by your firm with yourself as lead author. Marks will be awarded for presentation style and an appropriate business format.

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