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Please help me to answer these question about Allteck and Landfry-(Answered)

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Please help me to answer these question about Allteck and Landfry Consolidation


Allteck Building Ltd (?Allteck?) build luxury homes. In an attempt to vertically integrate their

 

business, they acquired all of the shares of Landfry Ltd (?Landfry?) on 1 July 2016 on an exdividend basis. Due to a downturn in the property market, Landfry made a loss in the prior

 

year for the first time. Legal and accounting fees related to the acquisition totalled $11000.

 

On 1 July 2016, Landfry had the following in its balance sheet;

 

Share capital

 

General Reserve

 

Retained earnings/

 

(losses)

 

Dividends Payable

 

Plant

 

Trademark

 

Land inventory

 

Building premises

 

Goodwill

 


 

$100,000

 

$750,000

 

($135,000)

 

$10,000

 

$275,000 (carrying amount of $85,000)

 

$50,000

 

$2,500,000

 

$600,000 (carrying amount of $120,000)

 

$20,000

 


 

Fair value of $65,000

 

Fair value of $60,000

 

Fair value of $2,900,000

 

Fair value of $850,000

 

Fair value of Nil

 


 

2016/2017 impairment testing reduces the carrying value of goodwill to $10,000. The

 

building premises and plant are being depreciated on a straight-line basis over 20 years and

 

10 years respectively. The building was acquired on 1 Jan 2001 and the plant has a further 3

 

years of depreciation remaining. The trademark is considered to have an indefinitely life.

 

Landfry currently has a legal dispute with a customer who claims that they were not advised

 

of problems with the title of some land. They are suing Landfry for $350,000 and the

 

directors believed there was a 35% chance of success at that stage. This was settled on

 

15/5/18 for $80000.

 

All of the inventory was sold in the 2016 year.

 

Additional information

 

a) The business turned around and on 1/3/18, Landfry was able to pay a $30,000

 

dividend. Shareholder approval is not required in relation to payment of

 

dividends.

 

b) On 1/1/17, a parcel of land costing Landfry $450,000 on 30 Nov 2016 was sold to

 

Allteck for $620,000 to build a display home. It is not expected that this land will

 

be sold in the immediate future.

 

c) On 30/06/17, Allteck sold a motor vehicle to Landfry for $50,000 for use by one

 

its staff. The vehicle cost Allteck $80,000 in Jan 2017 and it had a carrying value

 

of $65,000 at the date of sale. The M/V was being depreciated on a straight line

 

basis over 5 years.

 

d) During the 2017/2018 year, Landfry began selling some of the land acquired in

 

Jan 2018 to Allteck to include as a home and land package. There were two

 

blocks sold during the year, which cost Landfry $300,000 and $380,000. They

 

were sold to Allteck at a 15% margin. Only the first block was sold before 30

 

June 2018 with Allteck recording the other block as part of their work in progress

 


 

inventory. As at 30 June 2018, Allteck have not yet paid Landfry for the $300,000

 

block and it is expected to be paid in July 2018.

 

e) Landfry was running low on cash and borrowed $500,000 from Allteck on

 

1/3/18. Interest of 5% payable monthly was charged and paid. The loan was

 

partly paid back on 1/5/18 when Landfry issued $50,000 worth of additional

 

shares to Allteck.

 

f) The tax rate is 30%

 


 

The trial balances of both companies as at 30 June 2018 is as follows;

 


 

Required

 

Using Excel, prepare the consolidation worksheet for the year ended 30 th June 2018. You are not

 

required to complete the consolidated financial statements so your final result should be a

 

consolidated trial balance. Please Include narrations and details of all of your journals and excel

 

formulae (refer to submission guidelines)

 


 

 

Paper#9257028 | Written in 27-Jul-2016

Price : $16
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