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Prepare the consolidation journal entries and consolidation

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Reference no: EM13501824

Question

On 30thJune 2011 Peach Ltd acquired 100 per cent of the shares in Pear Ltd for $730,000 The following shows the financial positions of the companies as at 30 June 2011 (immediately following the acquisition).

 


Peach Ltd Pear Ltd
Equity $ $
Share capital 1,314,000 292,000
Retained earnings 438,000 219,000

1,752 000 511 000
Liabilities

Accounts payable 160,600 102,200
Long-term loans 292,000 277,400
Total liabilities $452,600 379,600
Total equity and liabilities $2,204,600 $890,600
Assets

Cash 146,000 73,000
Accounts receivable 189,800 131,400
Inventory 292,000 160,600
Investment in Pear Ltd 730,000
Land 438,000 146,000
Property, Plant and Equipment (PPE) 584,000 511,000
Accumulated depreciation on PPE (175,200) (131,400)
Total assets $2,204,600 $890,600

Additional Information:·All of the assets and liabilities of Pear Limited were valued at fair value at acquisition with the exception of the land,which had a fair value of $204,500.·The tax rate is 30 per cent.

Required

Prepare the consolidation journal entries and consolidation worksheet for the above entities.Adapted from Leo et al. (2009) Company accounting (8thed) John Wiley and Sons, Milton,Queensland.

Reference no: EM13501824

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