200109 Corporate Accounting Systems

200109 Corporate Accounting Systems

Consolidated Financial Statements with Non-Controlling Interests

Spring 2016

INSTRUCTIONS

The assignment is to be submitted as an individual attempt. It must be prepared using Excel spreadsheet and be entirely your own work from this semester only – i.e. do not use or copy any file, in whole or in part, from any previous semester or from any other person. Each student must individually create a new excel file for this assignment and use their student number as the file name.

• The assignment marking guide can be found as the last two pages of this document. Print these pages and complete the appropriate details. Use the marking guide sheet to see what is expected and how your work will be marked. Significant emphasis is placed on the correctness of the journal entries so ensure you spend adequate time on these. Review your work before submission and consider how well you have met the expected standards (performance levels) for the criteria identified.

Your submission needs to be printed on A4 paper, single-sided, and the pages must be stapled at the top left hand corner only. Do not bind your assignment, nor put it in a folder or a plastic sleeve. The first page must be a completed and signed cover sheet and the last page should be the two marking sheets with your student ID and name shown. The marker will use the marking sheet to calculate your assignment result and provide you with feedback on the standard you achieved against each of the criteria.

The printed assignment is to be submitted to your tutor during the first 10 minutes of your usual tutorial class in Week 11 beginning 26 September 2016. Submissions made during the tutorial, but after the 10 minute deadline, will be penalised by the deduction of 1 mark. Assignments not submitted at the registered tutorial class will be regarded as “late”. Students will need to contact the unit coordinator about the process for late submission, if necessary. All late submissions will be penalised as per UWS policy – a deduction of 2 marks (being, 10% of the possible mark) for each day, or part day, late.Submissions will not be accepted by email. If you cannot attend at your normal tutorial time you need to either send it along with a fellow classmate or personally hand it to your tutor before the class in which it is due – you would need to make arrangements directly with them about organising this.

After handing in the printed copy, the excel file must also be uploaded to vUWS by 5pm on Friday 3Oth September 2016 at the latest. Further instructions on this process will be provided on vUWS closer to the due date. The Excel file MUST EXACTLY MATCH the printed version and not be modified after the submitted version was printed. Uploading a file that doesn’t match exactly, or failing to upload the excel file on time, will result in a zero grade. The file will be checked against other students’ submissions for potential plagiarism.

Marks will be lost for poor quality presentation, for incorrect work, and for missing work. The presentation of the financial statements must follow the format of the examples in the end-of-chapter exercise in chapter 29 of the textbook.

Staff will not assist students with their answers, nor review draft answers to confirm if students are “on the right track” or not. Any queries about the requirements of the assignment must be directed to the Unit Coordinator only, not to other teaching staff.

All students will be required to self-mark their assignment and submit their marking sheet with their hard copy failure to do so will result in a 2 mark deduction to their overall result.

QUESTION

Using the information below and on the next two pages, prepare the following as at 30th June 2015:PART A:      Consolidation adjustment/elimination journal entries that are required at the above financial year end date (i.e. for one year only); and

PART B:      A detailed calculation of non-controlling interest balance and consolidation worksheet; and

PART C:      Consolidated financial statements and statements of changes in equity for both the the group and parent.

THE FOLLOWING EVENTS OCCURRED:

During the year ended 30 June 2013:

On 1 September 2012 Ivy Ltd created a group entity when it purchased 65% of the issued capital of Rose Ltd. On acquisition, Rose’s Ltd’s accounts showed: Share capital $200,000 and Retained earnings $46,000. All assets and liabilities appearing in Rose Ltd’s financial statements were fairly valued, except:

• One of their blocks of land was recorded at $40,000 when its fair value was judged by the group to be $90,000. During the following financial year this land was sold for $120,000 cash.
• An item of plant was undervalued by $30,000. At that time it had a remaining life of 5 years and accumulated depreciation of $20,000. The plant is still an asset of Rose Ltd at 30 June 2015.
• A contingent liability relating to an unsettled legal claim with a fair value of $60,000 was recorded in the notes to the financial statements. This amount will be tax deductible when paid. The court case is still in progress at 30 June 2015.

During the year ended 30 June 2014:

On 1 July 2013 Rose Ltd sold an item of plant to Ivy Ltd for $60,000. The plant had cost $64,000 when purchased on 31 December 2012. It’s expected useful life was originally 5 years and this original estimate is still considered to be valid. The plant is still an asset of Ivy Ltd at 30 June 2015.

During the year Ivy Ltd made sales of inventory to Rose Ltd of $62,000. The inventory balance of Rose Ltd at the end of the year included stock of $52,000 acquired from Ivy Ltd.

Ivy Ltd declared and paid dividends of $70,000 for the year. Rose Ltd did not declare or pay any dividends for the year.

During the year ended 30 June 2015:

On 1 November 2014 Ivy Ltd sold an item of plant to Rose Ltd for $90,000 when its carrying value in Ivy’s books on that date was $108,000 (original cost $180,000 and original estimated life of 5 years). The plant is still an asset of Rose Ltd at 30 June 2015.

During the year Rose Ltd made sales of inventory to Ivy Ltd of $44,400. The inventory balance of Ivy Ltd at the end of the year included stock of $21,200 acquired from Rose Ltd.

The management of Ivy Ltd believes that the goodwill acquired on acquisition of Rose Ltd was impaired by $9,000 in the current year. This is in addition to a total of $15,000 of impairment in previous years.

Ivy Ltd charged management fees to Rose Ltd.

Dividends were declared/paid by both companies.

Non-controlling interests in Rose Ltd to be recognised. This is the only subsidiary in the group