Reference no: EM13343463
The following financial statements of William Ltd and its subsidiary Adam Ltd have been extracted from their financial records at 30 June 2012.
|
William Ltd |
Adam Ltd |
|
$ |
$ |
$ |
$ |
|
|
|
|
|
| Extract from Statements of Comprehensive Income and Changes in Equity |
|
|
|
|
|
| Sales Revenue |
|
1,114,524 |
|
896,400 |
| Cost of Sales |
|
(770,240) |
|
(395,080) |
| Gross Profit |
|
344,284 |
|
501,320 |
| Other Revenue |
|
|
|
|
| Dividends received from Adam |
|
154,380 |
|
- |
| Management fee revenue |
|
43,990 |
|
- |
| Gain on sale of equipment |
|
66,400 |
|
58,100 |
| Expenses |
|
|
|
|
| General expenses |
(51,128) |
|
(64,242) |
|
| Selling expenses |
(167,826) |
|
(119,520) |
|
| Depreciation |
(48,970) |
|
(94,288) |
|
| Management fee expense |
- |
|
(43,990) |
|
| Total expenses |
|
(267,924) |
|
(322,040) |
| Profit before tax |
|
341,130 |
|
237,380 |
| Income tax expense |
|
(102,090) |
|
(70,052) |
| Profit for the period |
|
239,040 |
|
167,328 |
| Retained earnings 30 June 2011 |
|
530,204 |
|
397,072 |
|
|
769,244 |
|
564,400 |
| Dividends paid |
|
(228,084) |
|
(154,380) |
| Retained earnings 30 June 2012 |
|
541,160 |
|
410,020 |
|
|
|
|
|
| Statements of Financial Position |
| Current assets |
|
|
|
|
| Cash |
|
20,000 |
|
30,000 |
| Accounts receivable |
|
78,604 |
|
73,418 |
| Inventory |
|
152,720 |
|
48,140 |
| Non-current assets |
|
|
|
|
| Investment in Adam Ltd |
|
590,960 |
|
- |
| Land |
|
371,840 |
|
541,160 |
| Equipment (cost) |
497,751 |
|
590,628 |
|
| Accumulated depreciation |
(142,345) |
355,406 |
(230,408) |
360,220 |
| Total Assets |
|
1,569,530 |
|
1,052,938 |
| Current liabilities |
|
|
|
|
| Accounts payable |
|
90,802 |
|
76,858 |
| Short-term loan payable |
|
68,558 |
|
41,500 |
| Non-current liabilities |
|
|
|
|
| Long-term debt |
|
288,010 |
|
192,560 |
| Shareholders' equity |
|
|
|
|
| Share capital |
|
581,000 |
|
332,000 |
| Retained earnings |
|
541,160 |
|
410,020 |
| Total Liabilities & Equity |
|
1,569,530 |
|
1,052,938 |
Other information:·William Ltd acquired the 100 per cent interest in Adam Ltd on 1 July 2007, that is five (5) years earlier.At that time the capital and retained earnings of Adam Ltd were:Share capital $332,000Retained earnings$298,800 $630,800At the date of acquisition all assets were valued at their fair value.·During the year William Ltd made total sales to Adam Ltd of $99,600, and Adam Ltd sold $83,000 of inventory to William Ltd.·The opening inventory in William Ltd as at 1 July 2011 included inventory acquired from Adam Ltd for $66,400 that had cost Adam Ltd $49,800.·The closing inventory of William Ltd includes inventory acquired from Adam Ltd at a cost of $54,780.This inventory had cost Adam $46,480.·The closing inventory of Adam Ltd includes inventory acquired from William Ltd at a cost of $19,920.This inventory had cost William Ltd $16,600.·On 1 July 2011 Adam Ltd sold an item of equipment to William Ltd for $192,560 when its carrying value in Adam Ltd's books was $134,460 (cost $224,100, accumulated depreciation $89,640).This equipment is assessed as having a remaining useful life of six (6) years.·Adam Ltd paid $43,990 in management fees to William Ltd.·The tax rate is 30 per cent.
Required- Prepare the journal entries necessary for the preparation of consolidated financial statements. Prepare a consolidated statement of financial position as at 30 June 2012 and a consolidated statement of comprehensive income and a consolidated statement of changes in equity for the period ended 30 June 2012 for William Ltd and its subsidiaries.You can use a consolidation worksheet if you wish to, however it is NOT required for this assignment, and no marks will be awarded for it.Adapted from Leo et al. (2009) Company accounting (8thed) John Wiley and Sons, Milton,Queensland.