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Objective:Apply selected accounting standards to a...

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Objective:Apply selected accounting standards to a practical problem The financial statements of Sunset Ltd and its subsidiary Moonrise Ltd, at 30 June 2012, contained the following information: Sunset Ltd Moonrise Ltd Profit before tax $ 64 000 $ 36 000 Income tax expense 26 000 4 800 Profit for the year 38 000 31 200 Retained earnings (1/7/11) 30 000 42 000 68 000 73 200 Dividend paid 10 000 0 Retained earnings (30/6/12) 58 000 73 200 Share capital 500 000 200 000 General reserve 160 000 30 000 Liabilities 120 000 66 000 $ 838 000 $ 369 200 Land $ 172 000 $ 102 000 Plant 240 000 160 000 Accumulated depreciation (100 000) (20 000) Financial assets 60 000 40 000 Inventory 60 000 80 000 Cash 6 000 7 200 Shares in Moonrise Ltd 400 000 0 $ 838 000 $ 369 200 Sunset Ltd had acquired all the share capital of Moonrise Ltd on 1 July 2010 for $400 000 when the equity of Moonrise Ltd consisted of: share capital-10,000 shares $200,000 General reserve $ 40,000 Retained earning $ 30,000 At the acquisition date by Sunset Ltd, Moonrise Ltd?s non-monetary assets consisted of: Carrying amount Fair value Land $80 000 $120 000 Plant (cost $120 000) 110 000 130 000 Inventory 60 000 80 000 The plant had a further 5 year life. All the inventory was sold by 30 June 2011. All valuation adjustments to non-current assets are made on consolidation. The tax rate is 30%. In September 2010, Moonrise Ltd transferred $10 000 from its general reserve, earned before 1 July 2010, to retained earnings. Required: Prepare the consolidated journal entries, the consolidated worksheet and the consolidated financial statements for the year ended 30 June 2012.

 

Paper#4361 | Written in 18-Jul-2015

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