The following financial statements of Joel Ltd and its subsidiary Parko Ltd have been extracted from their financial records at 30 June 2012.

QUESTION 3 CONSOLIDATIONS

Joel Ltd

Parko Ltd

$ thousands

$ thousands

Reconciliation of opening and closing retained earnings

Sales revenue

671.40

540.00

Cost of goods sold

(464.00)

(238.00)

Gross profit

207.40

302.00

Dividends received from Parko Ltd

93.00

Management fee revenue

26.50

Gain on sale of plant

40.00

35.00

Expenses

Administrative expenses

(30.80)

(38.70)

Depreciation

(29.50)

(56.80)

Management fee expense

(26.50)

Other expenses

(101.10)

(72.00)

Profit before tax

205.50

143.00

Tax expense

61.50

42.20

Profit for the year

144.00

100.80

Retained earnings – 30 June 2011

319.40

239.20

463.40

340.00

Dividends paid

(137.40)

(93.00)

Retained earnings – 30 June 2012

326.00

247.00

Joel Ltd

Parko Ltd

$ thousands

$ thousands

Statement of financial position

Shareholders’ equity

Retained earnings

326

247

Share capital

350

200

Current liabilities

Accounts payable

54.7

46.3

Tax payable

41.3

25

Non-current liabilities

Loans

173.5

116

945.5

634.3

Current assets

Accounts receivable

59.4

62.3

Inventory

92

29

Non-current assets

Land and building

224

326

Plant – at cost

299.85

355.8

Accumulated depreciation

-85.75

-138.8

Investment in Parko Ltd

356

945.5

634.3

Other Information

· Joel Ltd acquired its 100 percent interest in Parko Ltd on 1 July 2007 that is five years earlier. At that date the capital and reserves of Parko Ltd were:

Share capital $200 000

Retained earnings $180 000

$380 000

At the date of acquisition all assets were considered to be fairly valued.

· During the year Joel Ltd made total sales to Parko Ltd of $60 000, while Parko Ltd sold $50000 in inventory to Joel Ltd.

· The opening inventory in Joel Ltd as at 1 July 2011 included inventory acquired from Parko Ltd for $40 000 that cost Parko Ltd $30 000 to produce.

· The closing inventory in Joel Ltd includes inventory acquired from Parko Ltd at a cost of $33000. This cost Parko Ltd $28 000 to produce.

· The closing inventory of Parko Ltd includes inventory acquired from Joel Ltd at a cost of $12000. This cost Joel Ltd $10 000 to produce.

· On 1 July 2011Parko Ltd sold an item of plant to Joel Ltd for $116 000 when its carrying value in Parko Ltd’s accounts was $81 000 (cost $135 000, accumulated depreciation $54000). This plant is assessed as having a remaining useful life of six years.

· Parko Ltd paid $26 500 in management fees to Joel Ltd.

· The tax rate is 30 percent.

Required:

Prepare a consolidated statement of financial position and a consolidated statement of comprehensive income for Joel Ltd and Parko Ltd as at 30 June 2012. Also prepare a consolidated statement of changes in equity.

 

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