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Prepare the consolidated income statement

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Reference no: EM132016982

Problem - On 1 July 2009 Bon Ltd acquired all the issued shares of Jovi Ltd for $36,000. At that date the accounts of Jovi Ltd show the following (assume assets acquired represent fair market value):

Share capital - $15,000

General reserve - $ 5,000

Retained earnings - $12,000

Additional information for the year ended 30 June 2012:

1. Sales by Jovi Ltd to Bon Ltd during the year amounted to $12,000

2. Unrealised profit in inventory of Bon Ltd:

At 1.7.11, $1,000;

At 30.6.12, $1,200

3. On 1 January 2012 Bon Ltd sold an item of plant to Jovi Ltd for $28,000, making a profit on the sale of $8,000. This item of plant was acquired at a cost of $25,000 exactly one year ago. Both Bon and Jovi Ltd depreciate plant and equipment at 20% per annum on cost; Jovi Ltd depreciates the plant from Bon Ltd assuming further useful life of 4 years starting from the date of its acquisition/ transfer.

4. Included in the other assets of Bon Ltd is a three-year loan of $25,000 at 10% pa to Jovi Ltd made on 1 April 2012. Three months' interest was accrued by both companies at 30 June 2012.

5. On 1 July 2010 Jovi Ltd sold an item of equipment to Bon Ltd for $19,000. This equipment was acquired by Jovi Ltd at 1 July 2008 for $30,000. Both Bon and Jovi Ltd depreciate plant and equipment at 20% per annum on cost; Bon Ltd depreciates the equipment from Bon Ltd based on 4 years' further useful life starting from the date of its acquisition/ transfer.

6. In addition to item 1 above, Bon Ltd also sold inventory of $15,000 to Jovi Ltd on 1 July 2011. The original cost of this inventory to Bon Ltd was $ 6,000. Jovi Ltd has 50% of this inventory on hand at 30 June 2012

7. The company income tax rate is 30%.

Required: Prepare the consolidated income statement, consolidated statement of changes in equity, and consolidated balance sheet of the Bon Ltd group for the year ended 30 June 2012, as required by AASB 127 based on the following consolidated worksheet. Show all relevant consolidation journal entries.

Attachment:- Assignment File.rar

Reference no: EM132016982

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