Reference no: EM131812647
Wombat Ltd acquired 75% of the shares of Kangaroo Ltd on 1 July 2012. In exchange for these share Wombat Ltd gave a consideration of $26 000 cash and 10 000 shares in Wombat Ltd, these having a fair value of $2 each. At this date the shareholders' equity of Kangaroo Ltd consisted of:
Share capital (15 000 shares)
Retained earnings $ 45 000
9 000
At this date all the identifiable assets and liabilities of Kangaroo Ltd were recorded at amounts equal to their fair values except for plant for which the fair value was $2000 greater than the carrying amount of $25 000 (original cost was $35 000). The plant was expected to have a further 5-year life. The fair value of the non-controlling interest at 1 July 2012 was $15 000. Wombat Ltd uses the full goodwill method. The tax rate is 30%.
Assets held by Kangaroo Ltd at 30 June 2017 include financial assets. Gains and losses on these assets are recognised in other comprehensive income. During the 2016-17 year Kangaroo Ltd recorded gains of $1500 on these assets. Financial information supplied by the two companies at 30 June 2017 was as follows:
Wombat Ltd Kangaroo Ltd
Sales revenue $75 000 $118 000
Interest revenue 375 1 000
Dividend revenue 2 700 1 000
78 075 120 000
Cost of sales (51 000) (87 750)
Financial expenses (2 250) (3 000)
Selling expenses (6 000) (9 000)
Other expenses (2 250) (2 250)
(61 500) (102 000)
Profit before tax 16 575 18 000
Income tax expense (7 500) (8 200)
Profit for the year 9 075 9 800
Retained earnings (1/7/16) 28 900 21 700
37 975 31 500
Dividend paid (4 000) (3 600)
Retained earnings (30/6/17) 33 975 27 900
Share capital 60 000 45 000
Other components of equity - 7 500
Total equity 93 975 80 400
Current liabilities 12 750 4 350
Non-current liabilities: Loans - 7 500
Total liabilities 12 750 11 850
Total equity and liabilities $106 725 $92 250
Plant 45 000 90 000
Accumulated depreciation - plant (25 500) (45 750)
Shares in Kangaroo Ltd 46 000 0
Loans from Kangaroo Ltd 3 750 0
Inventories 13 400 23 250
Cash 21 075 750
Financial assets 0 16 500
Deferred tax assets 3 000 7 500
Total assets $106 725 $92 250
Additional information
(a) At 1 July 2017, Wombat Ltd held inventories that had been sold to it by Kangaroo Ltd in the previous year at a profit of $1200.
(b) During the 2016-17 year, Kangaroo Ltd sold inventories to Wombat Ltd for $28 500. At 30 June 2017, Wombat Ltd still had on hand inventories that had been sold to it by Kangaroo Ltd for a profit of $1800 before tax.
(c) Interest of $375 was paid by Wombat Ltd to Kangaroo Ltd on both 30 June 2016 and 30 June 2017.
Required
Prepare the consolidated financial statements of Wombat Ltd for the year ended 30 June 2017.