Consolidated Financial Statements - Business Combination Valuation - Accounting and Finance Assignment Help

Assignment Task:

Question: Topic 3 and 4 - Consolidated financial statements, method, acquisition, business combination valuation and intra-group transactions

Additional Information:

1. The dividend payable at acquisition date was subsequently paid in August 2017.

2. The revalued inventory was sold during the year ended 30 June 2018.

3. The contingent liability identified on the acquisition of School Ltd still existed at 30 June 2020.

4. The revalued land was sold during the year ended 30 June 2020 for $52,000.

5. The revalued buildings were still held at 30 June 2020 being depreciated on the straight-line basis at 15% per year.

6. In May 2018, goodwill was impaired by $1,500. An additional $2,500 impairment occurred during the year ended 30 June 2020.

7. Management fee revenues earned by Old Ltd during the year ended 30 June 2020 were collected from School Ltd.

8. School Ltd’s inventory balance at 1 July 2019 included an item previously purchased from Old Ltd. This inventory had been sold by Old Ltd to School Ltd at a profit of $6,500.

9. During the year ended 30 June 2020, School Ltd sold a quantity of inventory to Old Ltd for $12,000. This inventory had originally cost School Ltd $8,000 with 30% of this inventory still being held by Old Ltd at 30 June 2020.

10. All dividends paid/declared by Old Ltd during the year ended 30 June 2020 were from post-acquisition profits.

Required:

1. Determine the gain on bargain purchase or goodwill as at acquisition date. (3 marks)

2. Prepare the consolidation journal entries for Old Ltd immediately after acquisition on 1 July 2017. (6 marks)

3. Prepare the consolidation journal entries for Old Ltd as at 30 June 2020. (16 marks)

4. Prepare the consolidation worksheet for the preparation of the consolidated financial statements by Old Ltd as at 30 June 2020.

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