Financial Accounting
There is right to the investors to control the investee when it is exposed or possess rights for generating variable returns through the involvement of investee and affect those returns by exerting power over the investee. As per the AASB 10, it is recommended to the finance director of MC is that the control model includes the three elements such as power of an investor, power over the investee and return to the investor etc.
in case of power over the investee, the investors should have an voting rights in the equity, preferences share etc. It is finding that those fulfilling their responsibilities, governing bodies then they have rights to become the members of particular company (Walton, 2016). Return to the investor is another criterion which has an ability to use the power in order to influences the return of the investors. Besides that, link between power and return helps the company to make an growth in future.
Consolidated statement of financial position | |
Particular | Amount ($000) |
Assets | |
Cash | 120 |
Accounts receivable | 100 |
Inventory | 263 |
Land | 1000 |
Property Plant and equipment | 1600 |
Accumulated depreciation | -613 |
Investment in TakeltEasy Ltd | 900 |
Total non-current assets | 3370 |
Liabilities | |
Accounts payable | 200 |
Dividends payable | 150 |
Loan | 810 |
Shareholders’ equity | |
Share capital | 1500 |
Retained earnings | 800 |
Total shareholders’ equity | 3370 |
Reconciliation of opening and closing retained earnings | ||
Profitaftertax | 400 | 190 |
Retained earnings — 30June2018 | 300 | 200 |
Interim dividend | 90 | -40 |
Finaldividend | 110 | -50 |
Retained earnings — 30June2019 | 500 | 300 |
Goodwill paid | ||
Consideration paid | 900000 | |
Fair value of non controlling interest | 720000 | 1620000 |
Assets acquired | 530000 | |
Liabilities assumed | 300000 | 230000 |
Goodwill | 1390000 | |
Goodwill = (Consideration paid + Fair value of non controlling interest) – (Assets acquired – Liabilities assumed)
(900000 + 720000) – (530000 – 300000)
= 1390000
NCI equity = Beginning NCI equity Fair Value + NCI’s interest in subsidiary income – NCI’s share of dividends
700000 + 60000 – 40000
= 720000
Deferred Tax worksheet for I Love Corporate Accounting Ltd | ||
Statement of profit or loss and other comprehensive income for the year ended 30 June 2019 | ||
GrossProfit | 7,30,000 | |
Expenses | ||
Administration expenses | 80,000 | |
Salaries | 2,00,000 | |
Long-service Leave | 20,000 | |
Warranty expenses | 10,000 | |
Depreciation expense – plant | 64,000 | |
Insurance | 30,000 | 4,04,000 |
Accounting profit before tax | 3,26,000 | |
Other comprehensive income | Nil | |
Taxation 30% | 97800 | |
Less: Tax considered on credit sales (credit sales = 100000) | 30000 | 67800 |
Profit after taxation | 2,96,000 | |
Assets and liabilities as disclosed in the statemet of financial positions as at 30 June 2019 | ||
Assets | ||
Cash | 20,000 | |
Inventory | 1,00,000 | |
Accounts receivable | 1,00,000 | |
Prepaid Insurance | 10,000 | |
Plant – cost | 4,00,000 | |
Less: Accumulated depreciation | 64,000 | 3,34,000 |
Total assets | 5,64,000 | |
Liabilities | ||
Accounts payable | 80,000 | |
Provision for warranty expenses | 20,000 | |
Loan payable | 2,00,000 | |
Warranty expenses were accrued | Paid | 20,000 |
Total liabilities | 3,20,000 | |
Net assets | 2,44,000 |
- According the provided information, it is found that Wiley & Sons Australasia Ltd is going to acquire to 70% share of Wiley Plus. As concerning concern of this, remaining percent will be known as the non controlling interest an d fair value of the net controlling interest will be $428571. As concerning the faire value, the amount of goodwill pursuant will be recorded by $728571 (1000000 + 428571-700000).
- As concerning of the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets, the goodwill pursuant recorded by $321000 (1000000+70000*0.3 – 700000).
- In the business environment, there are some implications of allowing the group to concern the goodwill. In this, the company should effective identify the assets acquired, liabilities assumed and other non-controlling interest in the acquisition.
Consolidated worksheet for FinalHeadache Ltd | ||
FinalHeadache Ltd | Solutions Ltd | |
($000) | ($000) | |
Sales revenue | 600 | 500 |
Costs of goods sold | 464 | -238 |
Gross Profit | 136 | 738 |
Dividends received from Solutions Ltd | 93 | – |
Management fee revenue | 26.5 | – |
Gain on sale of plant | 40 | 35 |
operating income | 295.5 | 773.00 |
Expenses | ||
Administrative expenses | 30.8 | 38.7 |
Depreciation | 29.5 | 56.8 |
Management fee expenses | 26.5 | 26.5 |
Other expenses | 101.1 | 72 |
187.9 | 194 | |
Profit before tax | 107.6 | 579 |
Tax expense | 32.28 | 173.7 |
Profit for the year | 75.32 | 405.3 |
Retained earning — 30 June 2018 | 319.4 | 239.2 |
394.72 | 644.5 | |
Dividends paid | 137.4 | 93 |
Retained earnings at 30 June 2019 | 257.32 | 551.5 |
Statements of financial position | ||
FinalHeadache Ltd | Solutions Ltd | |
($000) | ($000) | |
Shareholders’ equity | ||
Retained earnings | 257.32 | 551.5 |
Share capital Current liabilities Accounts payable | 350 | 200 |
Current liability | 54.7 | 46.3 |
Tax payable | 32.28 | 173.7 |
Non-current liabilities | ||
Loans | 173.5 | 116 |
867.8 | 1087.5 | |
Current assets | ||
Accounts receivable | 59.4 | 62.3 |
Inventory | 61 | 48 |
Non-current assets | ||
Land & Buildings | 224 | 326 |
Plant – at cost | 299.85 | 355.8 |
Accumulated depreciation – plant | -85.75 | -138.8 |
Investment in Solutions Ltd | 472 | – |
945.5 | 634.3 |
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