Consolidated Financial Statements with Non-Controlling Interests


Using the information below and the financial statementson the following page, prepare the following at 30 June 2013:
A. adjustment/elimination journal entries for consolidation (10 marks); and
B. consolidation worksheetand detailed calculation of non-controlling interest balance (5 marks); and
C. consolidated financial statements and statements of changes in equity of Platypus Limited and its controlled entities (5 marks).


1. On 1 January 2007 Platypus Ltd purchased 100% of the issued capital of Emu Ltd for $650,000 cash. On acquisition Emu Ltd accounts showed: Share capital $700,000 and Retained earnings $159,000. All assets and liabilities were recorded at fair value except for land that was undervalued by $80,000.

2. On 1 July 2008Platypus Ltd and Emu Ltd each acquired 35% of the issued capital of Koala Ltd for a combined total of $400,000 cash. The balance sheet of Koala Ltd at the acquisition date showed: Share capital $250,000 and Retained earnings $56,000. All assets and liabilities were recorded at fair value except foran item of plant that was undervalued by $30,000. At that time the plant had a remaining life of 6 years and accumulated depreciation of $24,000. The plant was still on hand at 30 June 2013.

For the year ended 30 June 2013:

3. On 1 July 2012Koala Ltd sold an item of plant to Emu Ltd for $72,750 when its carrying value in Koala’s books was $69,000 (original cost $110,400 and original estimated life of 12 years).

4. The opening inventory on 1 July 2012 in Platypus Ltd included stock of $29,000 acquired from Emu Ltd.

5. During the year Emu Ltd made sales of inventory to Koala Ltd of $116,000, while Koala Ltd sold $184,000 of inventory to Platypus Ltd.

6. Closing inventories on 30 June 2013 included the following: Platypus Ltd $55,000 (bought from Koala Ltd) and Koala Ltd $28,000 (bought from Emu Ltd).

7. Platypus Ltd charged management fees to both Emu Ltd and Koala Ltd. Emu Ltd also charged management fees to Koala Ltd.

8. Dividends were declared/paid by the three companies.

$ $ $
Sales revenue 1,413,500 978,300 777,100
Cost of goods sold 798,000 538,060 427,400
Gross profit 615,500 440,240 349,700
Other income
Management fee revenue 22,600 21,000
Dividend revenue 222,750 36,750
Gain on sale of plant 3,750
Depreciation expense (126,200) (49,000) (93,700)
Management fee expense (12,600) (31,000)
Other expenses (326,100) (263,800) (221,400)
Profit before tax 408,550 172,590 7,350
Income tax expense (127,200) (50,050) (2,400)
Profit for the year after tax 281,350 122,540 4,950
Retained earnings at start of year 659,100 434,000 243,900
Dividend paid/declared (250,000) (186,000) (105,000)
Retained earnings at year end 690,450 370,540 143,850
Share capital 850,000 700,000 250,000
Retained earnings 690,450 370,540 143,850
Current Liabilities
Accounts payable 184,000 71,010 114,750
Income tax payable 125,900 66,700 2,600
Dividends payable 125,000 50,000 55,000
Provision for employee benefits 19,200 15,700 12,900
Non-Current Liabilities
Loans 675,100 175,100 645,000
Provision for employee benefits 21,900 19,400 14,100
Deferred tax liability 6,900 9,700
2,698,450 1,478,150 1,238,200
Current Assets
Accounts receivable 276,300 104,100 110,800
Allowance for doubtful debts (15,500) (7,000) (4,200)
Dividends receivable 69,250 19,250
Inventory 112,100 144,200 75,900
Non-Current Assets
Land and buildings 800,000 610,800 652,000
Plant – at cost 901,200 601,200 699,600
Accumulated depreciation – plant (294,900) (194,400) (297,600)
Deferred tax asset 1,700
Investment in Emu Ltd 650,000
Investment in Koala Ltd 200,000 200,000
2,698,450 1,478,150 1,238,200

9. Non-controlling interests to be recognised.

10. Platypus Ltd has the following accounting policies which have been in place for the groupfor many years: (i) Revaluation adjustments on acquisition are to be made on consolidation only, not in the books of the subsidiary; (ii) Non-controlling interest is measured at fair value; (iii) Intragroup sales of inventory to be at a markup of 25% on cost; (iv) Plant is depreciated straight-line over its estimated life, with no residual value; and (v) all amounts to be recorded to the nearest whole dollar.

11. The company tax rate is currently 30% and it has been this rate for many years.


· You MUST number journal entries as they relate to the point numbers given in the information below. Where more than one journal is needed, add the letters a,b,c,…etc to them. That is, if two journals are required to record the acquisition detailed in information point 1, then the first journal will be 1a and the second is 1b. Short narrations are expected for each journal entry.

· The consolidated statements required for both the group and the parent company are: the statement of comprehensive income, statement of financial position, and statement of changes in equity. Notes to the statements are not required.

· You may “cut and paste” the financial information on the next page into your excel file, but no other information is to be copied into your file.

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