Reference no: EM132316006
Corporate Accounting and Reporting Assignment -
Learning Outcomes -
a) Describe the financial reporting requirements that apply to Australian corporate groups.
b) Prepare consolidated financial statements for a corporate group through application of the main provisions in Australian Accounting Standards AASB 3, AASB 9, AASB10, ASSB12, AASB101, AASB 112, AASAB 121, AASB 127, AASB128, AASB 131 and AASB 136.
c) Use appropriate problem solving strategies, processes and arguments, locate research resources and critically review the research literature.
Assessment - Short report on financial statements and calculations
Purpose: This assessment is designed to allow students to research and analyse accounting standards and interpret how they apply to various corporate groups. It enables students to identify and solve problems relating to accounting for consolidated groups. It allows students to communicate the financial affairs of a company to financial report users. This relates to learning outcomes a, b and c.
Topic: Consolidation worksheet, consolidated financial statements.
Task Details: Griffin Ltd is a major Australian company operating in the manufacture of women's clothing. One of its major competitors is Frank Ltd whose business was established by a French family over 30 years ago. It has won numerous awards for its designs and has established a number of brands that have been successful, especially with the teenage market.
In order to expand its business as well as to reduce the number of players in the market, on 1 July 2016 Griffin Ltd acquired all the issued shares (cum div.) of Frank Ltd for $330 000. At this date the equity of Frank Ltd was as follows:
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Share capital
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$200,000
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General reserve
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20,000
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Retained earnings
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50,000
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All the identifiable assets and liabilities of Frank Ltd were recorded at amounts equal to their fair values except for the following:
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Carrying amount
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Fair value
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Plant (cost $220,000)
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$180,000
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$186,000
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Land
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190,000
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210,000
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Inventories
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20,000
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28,000
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The plant's expected remaining useful life was 5 years with benefits being expected evenly over that period. The plant was sold on 1 January 2019 for $187,000. The land was sold in February 2018 for $250,000. Of the inventory, 90% was sold by 30 June 2017 and the rest by 30 June 2018.
At 1 July 2016, Frank Ltd had recorded a dividend payable of $10,000 that was paid in September 2016. Frank Ltd also had some unrecorded assets, in particular the brands relating to the successful clothing sold in the teenage market. Griffin Ltd valued these brands at $12,000 and assessed them to have an indefinite life. In its financial statements at 30 June 2016, Frank Ltd raised a contingent liability relating to a guarantee it had made to one of its related companies. Griffin Ltd assessed the fair value of the guarantee payable at $10,000. In August 2018, Frank Ltd was required to pay $2500 in relation to the guarantee.
All transfers to the general reserve made by Frank Ltd have been from retained earnings earned prior to 1 July 2016. The tax rate is 30%.
The financial information provided by the two companies at 30 June 2019 is as follows: (see attached file).
Required: Prepare the consolidated financial statements of Griffin Ltd at 30 June 2019.
Attachment:- Assignment File.rar