onsider the following: On 1st July 20X6 P Ltd acquired all the share capital of
ID: 2517690 • Letter: O
Question
onsider the following:
On 1st July 20X6 P Ltd acquired all the share capital of S Ltd
At that date the equity of S Ltd was:
Share Capital ????$150,000
Retained earnings ???$12,000
Additional information:
During the current year P Ltd received a dividend of $15,000 declared by S Ltd at 30 June 20X7.
Consolidation worksheet 30 June 20X8
P Ltd
S Ltd
Elimination
Consolidated Statement
Dr
Cr
Gross profit
300,000
150,000
Dividend received from S Ltd
22,000
322,000
150,000
Expenses
102,000
50,000
Profit before tax
220,000
100,000
Less: Income tax expenses
60,000
30,000
Profit
160,000
70,000
Retained earnings 01-07-20X7
25,000
20,000
Available for appropriation
185,000
90,000
Appropriation
Interim dividend paid
20,000
7,000
Declared dividend
20,000
13,000
Total appropriation
40,000
20,000
Retained earnings 30-06-20X8
145,000
70,000
Share capital
300,000
150,000
Dividend payable
20,000
13,000
Other liabilities
140,000
67,000
605,000
300,000
Share in S Ltd
170,000
-
Other assets
435,000
300,000
Goodwill in acquisition
-
-
605,000
605,000
Requirement:
Complete the worksheet.
Consolidation worksheet 30 June 20X8
P Ltd
S Ltd
Elimination
Consolidated Statement
Dr
Cr
Gross profit
300,000
150,000
Dividend received from S Ltd
22,000
322,000
150,000
Expenses
102,000
50,000
Profit before tax
220,000
100,000
Less: Income tax expenses
60,000
30,000
Profit
160,000
70,000
Retained earnings 01-07-20X7
25,000
20,000
Available for appropriation
185,000
90,000
Appropriation
Interim dividend paid
20,000
7,000
Declared dividend
20,000
13,000
Total appropriation
40,000
20,000
Retained earnings 30-06-20X8
145,000
70,000
Share capital
300,000
150,000
Dividend payable
20,000
13,000
Other liabilities
140,000
67,000
605,000
300,000
Share in S Ltd
170,000
-
Other assets
435,000
300,000
Goodwill in acquisition
-
-
605,000
605,000
Explanation / Answer
Consolidation worksheet 30 June 20X8
P Ltd
S Ltd
Elimination
Consolidated Statement
Dr
Cr
Gross profit
300,000
150,000
450,000
Dividend received from S Ltd
22,000
22,000
-
322,000
150,000
22,000
-
450,000
Expenses
102,000
50,000
152,000
Profit before tax
220,000
100,000
298,000
Less: Income tax expenses
60,000
30,000
90,000
Profit
160,000
70,000
208,000
Retained earnings 01-07-20X7
25,000
20,000
12,000
15,000
48,000
Available for appropriation
185,000
90,000
256,000
Appropriation
Interim dividend paid
20,000
7,000
7,000
20,000
Declared dividend
20,000
13,000
13,000
20,000
Total appropriation
40,000
20,000
40,000
Retained earnings 30-06-20X8
145,000
70,000
216,000
Share capital
300,000
150,000
150,000
300,000
Dividend payable
20,000
13,000
13,000
20,000
Other liabilities
140,000
67,000
207,000
605,000
300,000
743,000
Share in S Ltd
170,000
-
170,000
-
Other assets
435,000
300,000
735,000
Goodwill in acquisition
-
-
8,000
8,000
605,000
300,000
743,000
Notes:
1. Dividends paid or payable by the subsidiary are all elimiated
a. Dividends received by P Ltd is reduced from its Net income or profit
b. Dividends paid by S ltd which pertain to previous year $15,000 is added back to the retained earnings and so is the interim dividends paid $7,000
c. Dividends declared and dividend payable $13,000 each are eliminated
2. Investment in Subsidiary ($170,000) is elimiated and so is the Equity ($150,000) and RE ($12,000) on the date of acquistion
3. Goodwill is added:
Consolidation worksheet 30 June 20X8
P Ltd
S Ltd
Elimination
Consolidated Statement
Dr
Cr
Gross profit
300,000
150,000
450,000
Dividend received from S Ltd
22,000
22,000
-
322,000
150,000
22,000
-
450,000
Expenses
102,000
50,000
152,000
Profit before tax
220,000
100,000
298,000
Less: Income tax expenses
60,000
30,000
90,000
Profit
160,000
70,000
208,000
Retained earnings 01-07-20X7
25,000
20,000
12,000
15,000
48,000
Available for appropriation
185,000
90,000
256,000
Appropriation
Interim dividend paid
20,000
7,000
7,000
20,000
Declared dividend
20,000
13,000
13,000
20,000
Total appropriation
40,000
20,000
40,000
Retained earnings 30-06-20X8
145,000
70,000
216,000
Share capital
300,000
150,000
150,000
300,000
Dividend payable
20,000
13,000
13,000
20,000
Other liabilities
140,000
67,000
207,000
605,000
300,000
743,000
Share in S Ltd
170,000
-
170,000
-
Other assets
435,000
300,000
735,000
Goodwill in acquisition
-
-
8,000
8,000
605,000
300,000
743,000
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