I have done all the adjusting entries and was wondering ifsomeone could take a look at them. I would really appreciate it ifyou could give me some feedback if any are wrong and how to fixthem. Two that I am real unsure about are "b." and "q." but againif you could look at them all I would be very grateful. ThankYou

DeeDee DoubleEntry, Incorporated
End of Period Worksheet
For the Year Ended December31, 2017
	Unadjusted				Adjusted
Account Title	Trial Balance		Adjustments		Trial Balance
	DR	CR	DR	CR	DR	CR
Cash	240,300	-		27,000	213,300
Restricted Cash			27,000		27,000
Accounts Receivable	925,000	-			925,000
Allowance for Doubtful Accounts	-	49,000	67,000		18,000
Interest Receivable	-		688		688
Merchandise Inventory	187,500	-	3,700		191,200
Prepaid Insurance	9,000	-		5,211	3,789
Prepaid Advertising	-	-	12,000		12,000
Prepaid Rent	-	-	7,500		7,500
Office Supplies	7,800	-		2,941	4,859
Note Receivable	75,000	-			75,000
Available for Sale Securities	380,000	-			380,000
Office Building	4,250,000	-			4,250,000
Accumulated Depreciation - OfficeBuilding	-	221,500		38,750		260,250
Storage Building	1,650,000	-			1,650,000
Accumulated Depreciation - StorageBuilding	-	-		46,667		46,667
Land	450,000	-			450,000
Leasehold Improvements	190,000	-	5,459		195,459
Accumulated Depreciation - LeaseholdImprovements	-	-		728		728
Office Equipment	125,000	-			125,000
Accumulated Depreciation - OfficeEquipment	-	42,000		16,600		58,600
Patent	250,000	-			250,000
Accumulated Amortization				31,250		31,250
Accounts Payable	-	145,000				145,000
Sales Tax Payable	-	-		19,821		19,821
Salaries Payable	-	-		39,249		39,249
Payroll Taxes Payable	-	-		3,251		3,251
Interest Payable	-	-		127,750		127,750
Income Tax Payable	-	-		245,756		245,756
Unearned Rent Revenue	-	96,000	25,263			70,737
Loan Payable - Onstar Bank	-	500,000				500,000
Loan Payable - Coldstar Bank	-	2,250,000				2,250,000
Common Stock	-	425,000				425,000
Additional Paid in Capital	-	2,800,000				2,800,000
Retained Earnings	-	1,379,420				1,379,420
Accumulated Other ComprehensiveIncome	-	8,500				8,500
Dividends	280,000	-			280,000
Sales	-	4,380,250	19,821			4,360,429
Sales Returns and Allowances	19,500	-			19,500
Sales Discounts	14,600	-			14,600
Cost of Goods Sold	1,817,900	-		3,700	1,814,200
Amortization Expense			31,250		31,250
Sales Salaries Expense	676,400	-	25,500		701,900
Office Salaries Expense	434,000	-	17,000		451,000
Advertising Expense	54,000	-		12,000	42,000
Depreciation Expense - OfficeBuilding	-	-	38,750		38,750
Depreciation Expense - StorageBuilding			46,667		46,667
Depreciation Expense - LeaseholdImprovements	-	-	728		728
Depreciation Expense - OfficeEquipment	-	-	16,600		16,600
Leasing Expense - Stores	132,000	-			132,000
Miscellaneous Selling Expense	16,950	-		5,459	11,491
Rent Expense - Storage Facility	18,000	-		7,500	10,500
Insurance Expense	2,000	-	5,211		7,211
Office Supplies Expense	28,500	-	2,941		31,441
Warranty Expense	5,000		5,709		10,709
Miscellaneous Administrative Expense	9,220	-			9,220
Rent Revenue	-	-		25,263		25,263
Interest Revenue on Note Receivable	-	-		688		688
Dividend Revenue on AFS Securities	-	18,000				18,000
Warranty Liability				5,709		5,709
Income Tax Expense			245,756		245,756
Interest Expense			127,750		127,750
Bad Debt Expense	67,000	-		67,000
	12,314,670	12,314,670	732,292	732,292	12,822,067	12,822,067

DeeDee DoubleEntry, Incorporated
Adjusting Journal Entries
For the Year Ended December31, 2017
Item	Account Title	Dr.	Cr.
a.	Restricted Cash	27,000
	Cash		27,000

b.	Allowance for Doubtful Accounts	67,000
	Bad Debt Expense		67,000

c.	Office Supplies Expense	2941
	Office Supplies		2941

d.	Prepaid Rent	7500
	Rent Expense - Storage Facility		7500

e.	Interest Receivable	688
	Interest Revenue on Note Receivable		688

f.	Insurance Expense	5211
	Prepaid Insurance		5211

g.	Depreciation Expense - Office Building	38750
	Accumulated Depreciation - Office Building		38750

h.	Office Salaries Expense	17000
	Sales Salaries Expense	25500
	Salaries Payable		39249
	Payroll Taxes Payable		3251

i.	Prepaid Advertising	12000
	Advertising Expense		12000

j.	Unearned Rent Revenue	25263
	Rent Revenue		25263

k.	Accumulated Other Comprehensive Income	89000
	Available for Sale Securities		89000

l.	Depreciation Expense - Office Equipment	16600
	Accumulated Depreciation - Office Equipment		16600

m.	Sales	19821
	Sales Tax Payable		19821

n.	Amortization Expense	31250
	Accumulated Amortization		31250

o.	Depreciation Expense - Storage Building	46667
	Accumulated Depreciation - Storage Building		46667

p.	Leasehold Improvements	5459
	Miscellaneous Selling Expense		5459

	Depreciation Expense - Leasehold Improvements	728
	Accumulated Depreciation - Leasehold Improvements		728

q.	Interest Expense	17500
	Interest Payable		17500

	Interest Expense	110250
	Interest Payable		110250

r.	Warranty Expense	5709
	Warranty Liability		5709

s.	Merchandise Inventory	3700
	Cost of Goods Sold		3700

t.	Income Tax Expense	245,756.00
	Income Tax Payable		245,756.00

DeeDee does banking at three different financial institutions.The details are as DeeDee Double Entry

Bank	Account #	Balance
Coterica	123456	175,000
Coterica	123457	(10,000)
4th BAnk	345689	82,000
Bank Two	397567	(6,700)

a. You also note the Board of Directors has restricted $27,000of cash for future expansion. This $27,000 is part of the cashbalance. The future expansion will not occur for several moreyears.

b. Based on your inquiries, you note that $67,000 of accountsreceivable had been written off during the year. The clerk haddebited bad debt expense for $67,000 and credited AccountsReceivable for $67,000. When $15,000 of accounts previously writtenoff had been collected, the accountant debited cash and creditedsales. The company uses the allowance method based on the aging ofaccounts receivable. Based on this method, DeeDee determines thatuncollectible accounts are $89,000 at the end of 2017. (Replace theX with the last digit of your student number).

c. Per a physical count of office supplies, $4,859 (enter thelast two digits of your student number) of supplies remained at theend of 2017. The balance on the worksheet in the office suppliesaccount represents last years ending balance. During the year,$28,500 of office supplies were purchased and immediatelyexpensed.

d. Because of strong demand and a need for additional inventory,DeeDee needed some temporary additional storage space so on June 1,2017 they rented a unit for an annual rate of $18,000 and they paidthe entire amount up front.

e. On November 1st, 2017, (Enter your birthday month) DeeDeeloaned a key supplier, $75,000. A promissory note was signed andissued. The agreed upon interest rate was 5.5% and the key supplierhas agreed to pay interest and $15,000 of the principle eachJanuary 1^st. The note was recorded in Notes Receivableand is the only note outstanding.

f. On February 1, 2017, DeeDee renewed a 19 month insurancepolicy for $9,000. All cash was paid at the time the policy wassigned and prepaid insurance was increased. (Replace the X with thelast digit of your student number.) All other transactionsinvolving insurance were properly recorded.

g. The office building was bought in January 1, 2015 by DeeDeeand DeeDee originally planned to use the building for 40 years andestimated no salvage value. DeeDee depreciates the building on a straightline basis. Now in 2017, DeeDee estimates the total life to remain at 40 years,but believes the salvage will be $900,000. (Replace theX with the last digit of your student number.)

h. DeeDee is open seven days a week and has a daily payroll of$8500. Employees are paid every Friday, December 31 is a Wednesday.40% of the payroll is for office employees, 60% of payroll is forsales employees. The employer portion of FICA expense is 7.65% andno employee has reached the maximum. DeeDee records payroll taxexpenses in salary expense.

i. On December 1, 2017 DeeDee paid ABC Advertising $16,000 for afour month campaign of advertising services. Equal services areprovided each month. All other advertising paid forduring the year has been consumed.

j. On August 1, 2017, DeeDee rented a portion of one store toMarketing Majors Inc. The contract was for 19 (enter the last digitof your student number) months and DeeDee required all of the cashup front. The rent is being earned equally each month. This is theonly item in which rent is being earned by the company.

k. As of 12/31/2017 the Available for Sale Securities have afair value of $291,000 (enter the last digit of your student numberin place of the X). Due to the market conditions, the company doesnot plan on selling the assets in 2017, but their intent is to sellat some point in time. You can ignore the tax effect onunrealized gains and losses. (Hint: Unrealized Gains andLosses are closed to Accumulated Other Comprehensive Income at theend of the year.)

l. DeeDee uses the DDB method to depreciate office equipment. Nooffice equipment was added during 2017. It is estimated that theoffice equipment has a useful life of 10 years with a salvage valueof $2,000. Prior depreciation was correctly calculated based onperiod of time held.

m. After reviewing details of sales, you note that the salestaxes collected on the last week of Decemberâs sales were includedin sales revenue. Sales recorded the last week of December thatincluded the sales tax of 12% (enter your birthday month plus 1)amounted to $185,000.

n. On November 1, 2017 (enter your birthday month), DeeDeerecorded a patent in the amount of $250,000. The company paidoutside legal fees of $120,000 to have the patent registered. Theother $130,000 represents internal costs in developing the patent.The patent is good for 20 years, but the company estimates that thepatent will have a useful life of 8 years with no residual value.No one knows what to do with this information so no amortizationhas been recorded for 2017. Amortization is straight line and thecompany depreciates using partial years for intangible assets.

o. The storage building was self-constructed this year byDeeDee. The Company had their initial expenditure of $700,000 onJanuary 1. They paid an additional $500,000 on March 1^st, $300,000 on June 1^st, and then the final payment of$150,000 on August 1^st. when the building was completedand occupancy occurred. Payments to contractor were properlycapitalized. The company has decided to use S/L method fordepreciation. The storage building is estimated to have a life of30 years and a savage value of $250,000. The companywill take a full year of depreciation in year of acquisition.

p. You note that Leasehold Improvements have not beendepreciated for this year. DeeDee started to lease some new retailspace in 2017 and added shelving and fixtures to this leased space.Based on your review of invoices, the previous accountantcapitalized the cost of fixtures but did not capitalize theshipping and installation costs of $5,459 ((enter the last threedigits of your student number in place of the XXX). . These costswere expensed and recorded as a miscellaneous administrativeexpense. DeeDee has decided to use double declining balance (DDB)depreciation for this item and to take a full year of depreciationin the year of acquisition. The leasehold improvements have auseful life of 15 years with a salvage value of$10,000.

q. DeeDee Double Entry has two loans outstanding as of12/31/2017. Interest is paid annually on January 1st. The facts on each loan are asfollows: Onstar Bank Loan â outstanding since January 1, 2017 with a 3.5%interest rate. This loan was taken out to finance the constructionof the Storage Building. Interest for the year and 15% of theprinciple will be paid to the bank on January 1, 2018. Except forrecording the initial cash received and loan, no additional entries have beenmade. Coldstar Bank Loan â also outstanding all of 2017 with a 4.9% interest rate (enter the last digit of your student number).Interest is due on January 1, 2018. Principle is due on January 1,2023. Since interest will not be paid to the Bank until 2018,DeeDeeâs office staff did not accrue any interest.

r. DeeDee added a one-year warranty to one of its computer gamesthis year. It is estimated that the total cost of servicing thewarranties on the 2017 sales will be $10,459 (enter the last threedigits of your student number). During 2017, $4,750 wasrefunded to customers for warranty issues on 2017 sales andrecorded as warranty expense.

s. DeeDee uses the FIFO Inventory Method in valuing inventory.The inventory balance of $187,500 was based on a physical count at12/31/2017. Based on your analysis, you have noted that $12,500 ofmarketing games that belonged to Marketing Majors Inc. was includedin the account. You also note that goods were in transit from avendor on December 31, 2017. The cost of the inventory was $16,200and the goods were shipped f.o.b. shipping point on December 29,2017.

t. DeeDee has a straight tax rate of 28%. Income tax expense isNet Income before taxes times 28%. (Hint: Prepare the IncomeStatement up to Net Income before Taxes and then record thisadjusting journal entry.

Topic 2: Consolidation: Intra-grouptransactions

On 1 July 2015, Ping Pong Ltd acquired all the issued shares ofSing Song Ltd. At the date of acquisition, the shareholdersâ equityof Sing Song Ltd consisted of share capital $120,000; generalreserve $25,000 and retained earnings $55,000. The identifiable netassets of Sing Song Ltd were recorded at amounts equal to theirfair values, except for the following assets:

	Carrying amount	Fair value
	$	$
Land	100,000	130,000
Inventories	78,500	86,100
Machinery (cost $86,000)	52,000	56,000
Vehicles (cost $58,000)	47,000	53,000

The assets of Sing Song Ltd at acquisition date includedgoodwill recorded at $15,000 arising from a business combinationtransaction in 2011. As at the date of acquisition, the vehiclesand machinery were expected to have a further useful life of 6 and8 years respectively, with benefits to be received evenly overthose periods. Inventories on hand on 1 July 2015 was all sold by31 January 2016. The land owned at 1 July 2015 was sold inSeptember 2016 for $150,000. The machinery on hand at 1 July 2015was sold on 1 January 2018 for $38,000.

Adjustments for the differences between carrying amount and fairvalues of assets and liabilities on hand at acquisition date arerecognised on consolidation. When assets are sold or derecognised,any related valuation reserves are transferred to retainedearnings.

At 1 July 2015, Sing Song Ltd owned but had not recorded aninternally generated brand name, an identifiable asset included aspart of the business combination transaction. This brand name wasconsidered by Ping Pong Ltd to have a fair value of $29,000 and anindefinite useful life. An impairment test conducted with respectto the brand name on 30 June 2018 concluded that its recoverableamount at that date was $2,000 less than its carrying amount.

In June 2017, Sing Song Ltd paid a share dividend worth $20,000from the general reserve on hand at 1 July 2015.

The trial balances of both companies at 30 June 2018 showed thefollowing balances:

	Ping Pong Ltd		Sing Song Ltd
	Dr ($)	Cr ($)	Dr ($)	Cr ($)
Sales revenue		450,000		320,000
Dividend revenue		17,000		-
Other income		11,400		17,000
Proceeds on sale of equipment		18,000		-
Proceeds on sale of machinery		-		38,000
Cost of sales	210,000		192,550
Income tax expense	30,000		32,000
Depreciation and other expenses	39,000		36,000
Carrying amount of equipment sold	21,000		-
Carrying amount of machinery sold	-		30,500
Dividend paid	10,000		5,000
Dividend declared	20,000		12,000
Transfer to general reserve	10,000		5,000
Share capital		200,000		140,000
General reserve		35,000		10,000
Retained earnings (1 July 2017)		51,300		67,500
Accounts payable		69,500		36,000
Loan payable (due 30 June 2022)		25,000		15,000
Dividend payable		20,000		12,000
Provisions		12,500		9,300
Current tax liability		43,000		34,000
Deferred tax liability		11,800		5,000
Accumulated depreciation-vehicles		16,400		60,000
Accumulated depreciation-equipment		-		34,500
8%Debentures (matures 30 June 2021)		25,000		-
Cash	2,500		1,250
Receivables	27,000		13,000
Inventories	39,700		24,500
Other current assets	15,200		8,200
Deferred tax assets	7,500		3,500
Vehicles	88,000		158,000
Equipment	-		42,000
Land	140,000		180,000
Financial assets	68,000		14,800
Goodwill	28,000		15,000
Shares in Sing Song Ltd	250,000		-
Debentures in Ping Pong Ltd	-		25,000
	1,005,900	1,005,900	798,300	798,300

Additional information:

On 1 January 2018, Ping Pong Ltd sold an item of equipment toSing Song Ltd for $18,000. The equipment had a carrying amount atthe date of sale of $21,000. Both companies depreciate equipment at20% on a straight line basis.

On 1 May 2017, Sing Song Ltd sold a machine to Ping Pong Ltd for$7,800. The machine had a carrying amount of $7,000 at the date ofsale. Ping Pong Ltd recorded the machine as inventories. Theinventories item was sold to an external party in November 2017 for$8,200.

All interests on the 8% debentures has been paid and brought toaccount in the records of both companies.

During the 2017-2018 financial year, Ping Pong Ltd soldinventories to Sing Song Ltd for $75,000. The cost of theseinventories to Sing Song Ltd was $70,000. Of these inventories, 25%is still on hand at 30 June 2018.

The transfer to the general reserve recorded by Sing Song Ltd inthe current year was from retained earnings recorded at 1 July2015.

The tax rate is 30%.

Required:

Prepare an acquisition analysis.

Prepare the consolidation worksheet entries necessary to preparethe consolidated financial statements for the year ending 30 June2018 for the group comprising Ping Pong Ltd and Sing Song Ltd.

Note: you are not required to prepare the consolidationworksheet and the consolidated financial statements.

orchiddeer92

On 1 July 2017, Panda Ltd acquired all the issued shares ofSmarty Ltd. Panda Ltd paid $250,000 more than the equity itacquired in the fair value of Smarty Ltdâs net assets. At the dateof acquisition, the shareholderâs equity of S

On 1 July 2017, Panda Ltd acquired all the issued shares ofSmarty Ltd. Panda Ltd paid $250,000 more than the equity itacquired in the fair value of Smarty Ltdâs net assets. At the dateof acquisition, the shareholderâs equity of Smarty Ltd was asfollows.

$

Share capital

100,000

Retained earnings

175,000

Total

275,000

All the assets and liabilities of Smarty Ltd were recorded atamounts equal to their fair values at the acquisition date, exceptfor some assets detailed below.

Remaining useful life

Cost

Carrying amount

Fair value

$

Plant

5 years

180,000

90,000

120,000

Computer equipment

5 years

90,000

40,000

60,000

Required:

Prepare the acquisition analysis at 1 July 2017.
Prepare the consolidation worksheet entries for Panda Ltdâs groupat 1 July 2017.
Prepare the consolidation worksheet entries for Panda Ltdâs groupat 30 June 2018.

Question 1

Max. marks allocated

Acquisition analysis

3

Consolidation entries at 1 July 2017

6

Consolidation entries at 30 June 2018

10

Presentation

1

Total

20

Question 2 [35 marks]

Topic 2: Consolidation: Intra-group transactions

On 1 July 2015, Ping Pong Ltd acquired all the issued shares ofSing Song Ltd. At the date of acquisition, the shareholdersâ equityof Sing Song Ltd consisted of share capital $120,000; generalreserve $25,000 and retained earnings $55,000. The identifiable netassets of Sing Song Ltd were recorded at amounts equal to theirfair values, except for the following assets:

Carrying amount

Fair value

$

Land

100,000

130,000

Inventories

78,500

86,100

Machinery (cost $86,000)

52,000

56,000

Vehicles (cost $58,000)

47,000

53,000

The assets of Sing Song Ltd at acquisition date includedgoodwill recorded at $15,000 arising from a business combinationtransaction in 2011. As at the date of acquisition, the vehiclesand machinery were expected to have a further useful life of 6 and8 years respectively, with benefits to be received evenly overthose periods. Inventories on hand on 1 July 2015 was all sold by31 January 2016. The land owned at 1 July 2015 was sold inSeptember 2016 for $150,000. The machinery on hand at 1 July 2015was sold on 1 January 2018 for $38,000.

Adjustments for the differences between carrying amount and fairvalues of assets and liabilities on hand at acquisition date arerecognised on consolidation. When assets are sold or derecognised,any related valuation reserves are transferred to retainedearnings.

At 1 July 2015, Sing Song Ltd owned but had not recorded aninternally generated brand name, an identifiable asset included aspart of the business combination transaction. This brand name wasconsidered by Ping Pong Ltd to have a fair value of $29,000 and anindefinite useful life. An impairment test conducted with respectto the brand name on 30 June 2018 concluded that its recoverableamount at that date was $2,000 less than its carrying amount.

In June 2017, Sing Song Ltd paid a share dividend worth $20,000from the general reserve on hand at 1 July 2015.

The trial balances of both companies at 30 June 2018 showed thefollowing balances:

Ping Pong Ltd

Sing Song Ltd

Dr ($)

Cr ($)

Dr ($)

Cr ($)

Sales revenue

450,000

320,000

Dividend revenue

17,000

-

Other income

11,400

17,000

Proceeds on sale of equipment

18,000

-

Proceeds on sale of machinery

-

38,000

Cost of sales

210,000

192,550

Income tax expense

30,000

32,000

Depreciation and other expenses

39,000

36,000

Carrying amount of equipment sold

21,000

-

Carrying amount of machinery sold

-

30,500

Dividend paid

10,000

5,000

Dividend declared

20,000

12,000

Transfer to general reserve

10,000

5,000

Share capital

200,000

140,000

General reserve

35,000

10,000

Retained earnings (1 July 2017)

51,300

67,500

Accounts payable

69,500

36,000

Loan payable (due 30 June 2022)

25,000

15,000

Dividend payable

20,000

12,000

Provisions

12,500

9,300

Current tax liability

43,000

34,000

Deferred tax liability

11,800

5,000

Accumulated depreciation-vehicles

16,400

60,000

Accumulated depreciation-equipment

-

34,500

8%Debentures (matures 30 June 2021)

25,000

-

Cash

2,500

1,250

Receivables

27,000

13,000

Inventories

39,700

24,500

Other current assets

15,200

8,200

Deferred tax assets

7,500

3,500

Vehicles

88,000

158,000

Equipment

-

42,000

Land

140,000

180,000

Financial assets

68,000

14,800

Goodwill

28,000

15,000

Shares in Sing Song Ltd

250,000

-

Debentures in Ping Pong Ltd

-

25,000

1,005,900

798,300

Additional information:

On 1 January 2018, Ping Pong Ltd sold an item of equipment toSing Song Ltd for $18,000. The equipment had a carrying amount atthe date of sale of $21,000. Both companies depreciate equipment at20% on a straight line basis.
On 1 May 2017, Sing Song Ltd sold a machine to Ping Pong Ltd for$7,800. The machine had a carrying amount of $7,000 at the date ofsale. Ping Pong Ltd recorded the machine as inventories. Theinventories item was sold to an external party in November 2017 for$8,200.
All interests on the 8% debentures has been paid and brought toaccount in the records of both companies.
During the 2017-2018 financial year, Ping Pong Ltd sold inventoriesto Sing Song Ltd for $75,000. The cost of these inventories to SingSong Ltd was $70,000. Of these inventories, 25% is still on hand at30 June 2018.
The transfer to the general reserve recorded by Sing Song Ltd inthe current year was from retained earnings recorded at 1 July2015.
The tax rate is 30%.

Required:

Prepare an acquisition analysis.
Prepare the consolidation worksheet entries necessary to preparethe consolidated financial statements for the year ending 30 June2018 for the group comprising Ping Pong Ltd and Sing Song Ltd.

Note: you are not required to prepare the consolidationworksheet and the consolidated financial statements.

marty Ltd was as follows.

	$
Share capital	100,000
Retained earnings	175,000
Total	275,000

All the assets and liabilities of Smarty Ltd were recorded atamounts equal to their fair values at the acquisition date, exceptfor some assets detailed below.

	Remaining useful life	Cost	Carrying amount	Fair value
		$	$	$
Plant	5 years	180,000	90,000	120,000
Computer equipment	5 years	90,000	40,000	60,000

Required:

Prepare the acquisition analysis at 1 July 2017.

Prepare the consolidation worksheet entries for Panda Ltdâsgroup at 1 July 2017.

Prepare the consolidation worksheet entries for Panda Ltdâsgroup at 30 June 2018.

Question 1	Max. marks allocated
Acquisition analysis	3
Consolidation entries at 1 July 2017	6
Consolidation entries at 30 June 2018	10
Presentation	1
Total	20

Question 2 [35 marks]

Topic 2: Consolidation: Intra-grouptransactions

On 1 July 2015, Ping Pong Ltd acquired all the issued shares ofSing Song Ltd. At the date of acquisition, the shareholdersâ equityof Sing Song Ltd consisted of share capital $120,000; generalreserve $25,000 and retained earnings $55,000. The identifiable netassets of Sing Song Ltd were recorded at amounts equal to theirfair values, except for the following assets:

	Carrying amount	Fair value
	$	$
Land	100,000	130,000
Inventories	78,500	86,100
Machinery (cost $86,000)	52,000	56,000
Vehicles (cost $58,000)	47,000	53,000

The assets of Sing Song Ltd at acquisition date includedgoodwill recorded at $15,000 arising from a business combinationtransaction in 2011. As at the date of acquisition, the vehiclesand machinery were expected to have a further useful life of 6 and8 years respectively, with benefits to be received evenly overthose periods. Inventories on hand on 1 July 2015 was all sold by31 January 2016. The land owned at 1 July 2015 was sold inSeptember 2016 for $150,000. The machinery on hand at 1 July 2015was sold on 1 January 2018 for $38,000.

Adjustments for the differences between carrying amount and fairvalues of assets and liabilities on hand at acquisition date arerecognised on consolidation. When assets are sold or derecognised,any related valuation reserves are transferred to retainedearnings.

At 1 July 2015, Sing Song Ltd owned but had not recorded aninternally generated brand name, an identifiable asset included aspart of the business combination transaction. This brand name wasconsidered by Ping Pong Ltd to have a fair value of $29,000 and anindefinite useful life. An impairment test conducted with respectto the brand name on 30 June 2018 concluded that its recoverableamount at that date was $2,000 less than its carrying amount.

In June 2017, Sing Song Ltd paid a share dividend worth $20,000from the general reserve on hand at 1 July 2015.

The trial balances of both companies at 30 June 2018 showed thefollowing balances:

	Ping Pong Ltd		Sing Song Ltd
	Dr ($)	Cr ($)	Dr ($)	Cr ($)
Sales revenue		450,000		320,000
Dividend revenue		17,000		-
Other income		11,400		17,000
Proceeds on sale of equipment		18,000		-
Proceeds on sale of machinery		-		38,000
Cost of sales	210,000		192,550
Income tax expense	30,000		32,000
Depreciation and other expenses	39,000		36,000
Carrying amount of equipment sold	21,000		-
Carrying amount of machinery sold	-		30,500
Dividend paid	10,000		5,000
Dividend declared	20,000		12,000
Transfer to general reserve	10,000		5,000
Share capital		200,000		140,000
General reserve		35,000		10,000
Retained earnings (1 July 2017)		51,300		67,500
Accounts payable		69,500		36,000
Loan payable (due 30 June 2022)		25,000		15,000
Dividend payable		20,000		12,000
Provisions		12,500		9,300
Current tax liability		43,000		34,000
Deferred tax liability		11,800		5,000
Accumulated depreciation-vehicles		16,400		60,000
Accumulated depreciation-equipment		-		34,500
8%Debentures (matures 30 June 2021)		25,000		-
Cash	2,500		1,250
Receivables	27,000		13,000
Inventories	39,700		24,500
Other current assets	15,200		8,200
Deferred tax assets	7,500		3,500
Vehicles	88,000		158,000
Equipment	-		42,000
Land	140,000		180,000
Financial assets	68,000		14,800
Goodwill	28,000		15,000
Shares in Sing Song Ltd	250,000		-
Debentures in Ping Pong Ltd	-		25,000
	1,005,900	1,005,900	798,300	798,300

Additional information:

On 1 January 2018, Ping Pong Ltd sold an item of equipment toSing Song Ltd for $18,000. The equipment had a carrying amount atthe date of sale of $21,000. Both companies depreciate equipment at20% on a straight line basis.

On 1 May 2017, Sing Song Ltd sold a machine to Ping Pong Ltd for$7,800. The machine had a carrying amount of $7,000 at the date ofsale. Ping Pong Ltd recorded the machine as inventories. Theinventories item was sold to an external party in November 2017 for$8,200.

All interests on the 8% debentures has been paid and brought toaccount in the records of both companies.

During the 2017-2018 financial year, Ping Pong Ltd soldinventories to Sing Song Ltd for $75,000. The cost of theseinventories to Sing Song Ltd was $70,000. Of these inventories, 25%is still on hand at 30 June 2018.

The transfer to the general reserve recorded by Sing Song Ltd inthe current year was from retained earnings recorded at 1 July2015.

The tax rate is 30%.

Required:

Prepare an acquisition analysis.

Prepare the consolidation worksheet entries necessary to preparethe consolidated financial statements for the year ending 30 June2018 for the group comprising Ping Pong Ltd and Sing Song Ltd.

Note: you are not required to prepare the consolidationworksheet and the consolidated financial statements.

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ACCT 4022 Chapter : Acct4022 HW5

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