Advanced Accounting Financial

Group assignment
Class 3
Mario Soliemin/16795648
Adrian Chrissanjaya/16907883

Roma Ltd Napoli Ltd

1.

Acquisition analysis at 1 July 2009.

Net fair value of identifiable assets and liabilities of Napoli Ltd

= ($180000 + $20000 + $30000 + $72000) (equity)
+ ($75000 - $50000) (1 30%) (land)
+ ($57000 - $55000) (1 30%) (building)
+ ($60000 - $45000) (1 30%) (inventory)
+ ($190000 - $182000) (1 30%) (plant)
+ ($38000 - $36000) (1 30%) (delivery truck)
+ $45000 (1 30%) (patent)
- $30000 (1 30%) (unrecorded liability)
= $348900
Consideration transferred = $360000
Goodwill = $360000 - $348900 = $11100

2.

The BCVR and pre-acquisition worksheet journal entries at 30 June 2012.

Business combination valuation entries
Land
Deferred tax liability
Business combination valuation reserve

Dr
Cr
Cr

25000

Accumulated depreciation buildings

Buildings
Deferred tax liability
Business combination valuation reserve

Dr
Cr
Cr
Cr

20000

Depreciation expense buildings

Retained earnings (1/7/11)
Accumulated depreciation buildings

Dr
Dr
Cr

200
400

Deferred tax liability

Income tax expense
Retained earnings (1/7/11)

Dr
Cr
Cr

180

Accumulated depreciation plant

Plant
Deferred tax liability
Business combination valuation reserve

Dr
Cr
Cr
Cr

78000

7500
17500
18000
600
1400

600
60
120
70000
2400
5600

Depreciation expense plant

Retained earnings (1/7/11)
Accumulated depreciation plant

Dr
Dr
Cr

1600
3200

Deferred tax liability

Income tax expense
Retained earnings (1/7/11)

Dr
Cr
Cr

1440

Depreciation expense delivery truck

Carrying amount of delivery truck sold
Retained earnings (1/7/11)
Income tax expense
Transfer from BCV reserve

Dr
Dr
Dr
Cr
Cr

375
625
700

Patent
Deferred tax liability
Business combination valuation reserve

Dr
Cr
Cr

45000

Impairment loss patent

Retained earnings (1/7/11)
Accumulated impairment loss patent

Dr
Dr
Cr

3000
6000

Deferred tax liability

Income tax expense
Retained earnings (1/7/11)

Dr
Cr
Cr

2700

Business combination valuation reserve

Deferred tax liability
Unrecorded Liability

Dr
Dr
Cr

21000
9000

Goodwill
Dr
Business combination valuation reserve Cr

11100

4800
480
960

300
1400
13500
31500

9000
900
1800

30000
11100

Pre-acquisition entries
The entry at 30 June 2012 is adjusted for:
- sale of inventory on hand
Retained earnings (1/7/11) *
Share capital
General Reserve
Plant Maintenance Reserve
Business combination valuation reserve
Shares in Napoli Ltd
*= 72000 + 10500( (BCVR inventory)

Dr
Dr
Dr
Dr
Dr
Cr

82500
180000
20000
30000
47500

Transfer from BCV reserve

Business combination valuation reserve
*Delivery Truck sold

Dr
Cr

1400

General Reserve
Transfer to General Reserve

Dr
Cr

10000

360000

1400

10000

3. The consolidation worksheet journal entries at 30 June 2013

1. Business combination valuation entries
Land
Deferred tax liability
Business combination valuation reserve

Dr
Cr
Cr

25000

Accumulated depreciation buildings

Buildings
Deferred tax liability
Business combination valuation reserve

Dr
Cr
Cr
Cr

20000

Depreciation expense buildings

Retained earnings (1/7/12)
Accumulated depreciation buildings

Dr
Dr
Cr

200
600

Deferred tax liability

Income tax expense
Retained earnings (1/7/12)

Dr
Cr
Cr

240

Accumulated depreciation plant

Plant
Deferred tax liability
Business combination valuation reserve

Dr
Cr
Cr
Cr

78000

Depreciation expense plant

Retained earnings (1/7/12)
Accumulated depreciation plant

Dr
Dr
Cr

1600
4800

Deferred tax liability

Income tax expense
Retained earnings (1/7/12)

Dr
Cr
Cr

1920

Impairment loss patent

Carrying amount of patent sold
Retained earnings (1/7/12)
Income tax expense
Transfer from BCV reserve

Dr
Dr
Dr
Cr
Cr

1500
34500
6300

Transfer from BCV reserve

Income tax expense
Loss on settlement
Damage Expense

Dr
Dr
Dr
Cr

21000
9000
4000

Goodwill
Dr
Business combination valuation reserve Cr

11100

Impairment loss goodwill

Dr
Accumulated impairment loss goodwill Cr

5000

Deferred tax liability

Income tax expense

1500

Dr
Cr

7500
17500
18000
600
1400

800
60
180
70000
2400
5600

6400
480
1440

10800
31500

34000
11100

5000
1500

2. Pre-acquisition entries
The entry at 30 June 2013 is adjusted for:
- sale of delivery truck
Retained earnings (1/7/12) *
Dr
73900
Share capital
Dr
180000
General Reserve
Dr
30000
Plant Maintenance Reserve
Dr
30000
Business combination valuation reserve
Dr
46100
Shares in Napoli Ltd
Cr
360000
*= 82500 + 1400 (BCVR inventory)- 10000 (transfer to general reserve)
Transfer from BCV reserve
Business combination valuation reserve
*Patent sold

Dr
Cr

31500

Business combination valuation reserve

Transfer from BCV reserve
*Unrecorded Liability settled

Dr
Cr

21000

Transfer from Plant Maintenance Reserve

Plant Maintenance Reserve

Dr
Cr

20000

Dr
Dr
Cr

5600
2400

Dr
Cr
Cr

2000

Depreciation expense - plant

Retained earnings (1/7/12)
Accumulated depreciation plant

Dr
Dr
Cr

400
500

Deferred tax liability

Income tax expense
Retained earnings (1/7/12)

Dr
Cr
Cr

270

Sales revenue
Cost of sales
Inventory

Dr
Cr
Cr

27000

Deferred tax asset

Income tax expense

Dr
Cr

900

31500

21000

20000

3. Profit in opening inventory

Retained earnings (1/7/12)
Income tax expense
Cost of Sales

8000

4. Sale of Plant
Plant
Retained earnings (1/7/12)
Deferred tax liability

1400
600

5. Depreciation

900
120
150

6. Profit in ending inventory

24000
3000
900

7. Loan: Roma Ltd to Napoli Ltd

Loan Payable - Napoli Ltd
Loan Receivable - Roma Ltd

Dr
Cr

35000

Dr
Cr

1400

Dr
Cr

40000

Retained earnings (1/7/12)

Cost of sales

Dr
Cr

3000

Income tax expense

Retained earnings (1/7/12)

Dr
Cr

900

Proceeds from sale of office furniture

Carrying amount of office furniture sold
Office Furniture

Dr
Cr
Cr

5000

Deferred tax asset

Income tax expense

Dr
Cr

150

Accumulated depreciation office furniture

Depreciation expense

Dr
Cr

50

Income tax expense

Deferred tax asset

Dr
Cr

15

Dividend payable
Final dividend declared

Dr
C

8000

Dividend revenue
Dividend receivable

Dr
Cr

8000

Dr
Cr

10000

8. Interest on loan
Interest Paid
Interest Received

35000

1400

9. Intercompany Rent
Rent Revenue
Rent Expense

40000

10. Sale of plant

3000
900

11. Sale of office furniture

4500
500
150

12. Depreciation
50
15

13. Dividend declared

8000
8000

14. Current dividend paid

Dividend revenue
Interim dividend paid

10000

4. The consolidation worksheet for Roma Ltd at 30 June 2013.

5. The consolidated financial statements for Roma Ltd at 30 June 2013.

Roma Ltd
Consolidated Statement of Comprehensive Income
for the financial year ended 30 June 2013
Revenue
Sales revenues
Gain on Sale of NCA
Other Revenue
Expenses from ordinary activities
Cost of sales
Amortisation & Depreciation
Other expenses
Profit before income tax
Income tax expense
Profit for the period
Comprehensive income for the year

$3,303,000
$
45,500
$
40,300 $3,388,800
$2,595,600
$ 127,750
$ 220,800 $2,944,150
$

444,650

$
$
$

146,265
298,385
298,385

Roma Ltd
Consolidated Statement of Changes in Equity
for financial year ended 30 June 2013

Roma Ltd
Consolidated Statement of Financial Position
as at 30 June 2013