On 1 july 2010 anderson ltd acquires 70 percent of the

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Reference no: EM13576173

On 1 July 2010 Anderson Ltd acquires 70 percent of the equity capital of Arthur Ltd at a cost of $4 million. At the date of acquisition all assets of Arthur are fairly stated and the total shareholder funds of Arthur Ltd are $4.4 million consisting of:


$

Share Capital

3 000 000

Retained Earnings

1 400 000


4 400 000

As at 30 June 2012 the financial statements of the two companies are as follows:


Anderson Ltd

Arthur Ltd


($ 000)

($ 000)

Detailed reconciliation of opening and closing retained earnings



Sales Revenue

800

200

Cost of Goods Sold

(200)

(80)

Other Expenses

(120)

(60)

Other Revenue

310

85

Profit

790

145

Tax

170

35

Profit After Tax

620

110

Retained Earnings - 30 June 2011

2 000

1 600


2 620

1 710

Dividends Paid

(400)

(80)

Retained Earnings - 30 June 2012

2 220

1 630




Statement of Financial Position



Shareholders Equity



Retained Earnings

2 220

1 630

Share Capital

8 000

3 000

Current Liabilities



Accounts Payable

120

80

Non-current Liabilities



Loans

1 200

500


11 540

5 210

Current Assets



Cash

300

50

Accounts Receivable

500

350

Inventory

1 000

600

Non-current Assets



Land

2 800

2 210

Plant

2 940

2 000

Investment in Arthur Ltd

4 000

-


11 540

5 210

Additional Information

  • The Management of Anderson Ltd measures any non-controlling interest in Arthur Ltd at fair value.
  • During the 2012 financial year Arthur Ltd sells $45 000 of inventory to Anderson Ltd. At year end Anderson has sold this inventory.
  • The tax rate is 30 percent.

Required: Showing all workings, including a consolidation worksheet and journal entries, prepare the consolidated statement of financial position, consolidated statement of comprehensive income and consolidated statement of changes in equity for Anderson Ltd and its controlled entity.

Reference no: EM13576173

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