It looks my work need some corrections. Could you please correct if my figures as per below instructions and make any adjustments where needed.

hint: affected are journal entries and Templates A to E.

Many thanks

-In the elimination of intercompany sales and profits, you have correctly calculated the unrealized profit for the sales from Bells to Torquay and from Torquay to Bells. However, you have not included the tax effect of these unrealized profits. According to AASB 112 Income Taxes, the tax effect of these unrealized profits should be recognized.

-In the adjustment for dividends, you have correctly eliminated the dividends receivable from Bells Ltd. However, you have not eliminated the dividends payable by Torquay Ltd. This should be eliminated as it is an intragroup transaction.

-In the elimination of intercompany transactions, you have correctly eliminated the management fees. However, you have not eliminated the dividends declared by Torquay Ltd. This should be eliminated as it is an intragroup transaction.

-In the calculation of non-controlling interest, you have correctly calculated the non-controlling interest in the earnings of Torquay Ltd. However, you have not calculated the non-controlling interest in the net assets of Torquay Ltd. This should be calculated as 20% of the net assets of Torquay Ltd.

-In the consolidated statement of financial position, you have correctly calculated the total assets and total liabilities. However, you have not correctly calculated the total equity. The total equity should be the sum of the equity attributable to the owners of the parent and the non-controlling interest.

-In the consolidated statement of changes in equity, you have correctly calculated the balance at 1 July 2017 and the total comprehensive income for the year. However, you have not correctly calculated the dividends. The dividends should be subtracted from the retained earnings, not added to it.

-In the statement of changes in equity for Bells Ltd, you have correctly calculated the balance at 1 July 2017 and the total comprehensive income for the year. However, you have not correctly calculated the dividends. The dividends should be subtracted from the retained earnings, not added to it.

-In the consolidated statement of financial position for Bells Ltd and its controlled entity, you have correctly calculated the total assets and total liabilities. However, you have not correctly calculated the total equity. The total equity should be the sum of the equity attributable to the owners of the parent and the non-controlling interest.

Case study:

On 1 July 2016 Bells Ltd acquires 80 per cent of the equity capital of Torquay Ltd at the cost of $2 million. All assets of Torquay Ltd were fairly stated, and the total shareholders' funds of Torquay Ltd were $2.2 million, as follows:

Share capital	$1 500 000
Retained earnings	$700 000
	$2 200 000

As of 30 June 2018 (that is, two years after the date of the acquisition) the financial statements of the two companies are as follows:

	Bells Ltd ($000)	Torquay Ltd ($000)
A detailed reconciliation of opening and closing retained earnings
Sales revenue	480	115
Cost of goods sold	(100)	(40)
Other expenses	(80)	(15)
Other revenue	70	25
Profit before tax	370	85
Tax expense	60	30
Profit for the year	310	55
Retained earnings30 June 2017	1 000	800
	1 310	855
Dividends paid	(160)	(30)
Dividend declared	(40)	(10)
Retained earnings30 June 2018	1 110	815
Statement of financial position
Shareholders' equity
Retained earnings	1 110	815
Share capital	4 000	1 500
Current liabilities
Accounts payable	20	30
Dividends payable	40	10
Non-current liabilities
Loans	600	250
Total of liabilities and equity	5 770	2 605
Current assets
Cash	150	25
Accounts receivable	242	175
Dividends receivable	8	-
Inventory	500	300
Non-current assets
Land	1400	1105
Plant	1870	1300
Accumulated depreciation	(400)	(300)
Investment in Torquay Ltd	2 000	-
Total assets	5 770	2 605

Other information:

• The management of Bells Ltd values any non-controlling interest in Torquay Ltd at fair value.
• During the current financial year, Torquay Ltd pays management fees of $10 000 to Bells Ltd. This item is included in 'other' expenses and income.
• During the current financial year, Bells Ltd sold inventory to Torquay Ltd at a price of $30 000. The inventory cost Bells $22 000 to produce. Fifty per cent of this inventory is still on hand with Torquay Ltd at the end of the financial year. (Hint: as this unrealised profit relates to sales made by Bells Ltd then no adjustments are necessary when calculating non-controlling interests in Torquay Ltd.)
• During the current financial year, Torquay Ltd sold inventory to Bells Ltd at a price of $20 000. The inventory cost Torquay Ltd $14 000 to produce. Forty per cent of this inventory is still on hand with Bells Ltd at the end of the financial year. (Hint: as this unrealised profit relates to sales made by Torquay Ltd then adjustments will be necessary when calculating non-controlling interests in Torquay Ltd.)
• In the preceding financial year, Torquay Ltd sold inventory to Bells Ltd at a price of $11 000. The inventory cost Torquay Ltd $8000 to produce. At 30 June 2017, 20 per cent of this inventory was still held by Bells Ltd. (Hint: this information will be used to make an adjustment to non-controlling interests in Torquay Ltd.)
• The management of Bells Ltd believes that goodwill acquired has subsequently been impaired. It was impaired by $12 000 in the year to 30 June 2017, and by a further $12 000 in the year to 30 June 2018. (Hint: because the non-controlling interest in Torquay is being valued at fair value, then this will mean that the non-controlling interest will incorporate a proportional share of goodwill. Therefore, any impairment in goodwill will impact the non-controlling interest in Torquay Ltd.)
• On 1 July 2017 Torquay Ltd sold an item of plant to Bells Ltd for a price of $45 000 when its carrying amount in Torquay Ltd.'s accounts were $25 000 (cost $50 000, accumulated depreciation $25 000). This item of the plant was being depreciated over a further 10 years, with no expected residual value. (Hint: as this unrealised profit relates to a sale of plant made by Torquay Ltd then adjustments will be necessary when calculating non-controlling interests in Torquay Ltd.)
• On 30 June 2018, the directors of Torquay Ltd declared and communicated to their shareholders that they would pay a final dividend amounting to $10 000. (Hint: dividends paid by Torquay will act to reduce the non-controlling interest in Torquay.)

Bells ltd. policy and procedures

The organisation has the following policies and procedures to consolidate the financial accounts:

Uniform Accounting Policies

Bells Ltd. shall prepare consolidated financial statements using uniform accounting policies for like transactions andother events in similar circumstances.

Consolidation of an investee shall begin from the date the investor obtains control of the investee and cease when the investor loses control of the investee. Changes in a parent's ownership interest in a subsidiary that do notresult in the parent losing control of the subsidiary areequity transactions (i.e. transactions with owners in their capacity as owners).

Non-Controlling Interests

Bells ltd. shall present non-controlling interests in the consolidated statement of financial position within equity, separately from the equity of the owners of the parent.

Loss of Control

If Bells Ltd. loses control of a subsidiary, the parent:

1. derecognises the assets and liabilities of the former subsidiary from the consolidated statement of financial position;
2. recognises any investment retained in the former subsidiary at its fair value when control is lost and subsequently accounts for it and for any amounts owed by or to the former subsidiary in accordance withrelevant IFRSs; and
3. recognises the gain or loss associated with the loss of control attributable to the former controlling interest.

Conversions and Consolidation procedures

Conversion procedures:

1. In case if the transaction happens in a foreign currency, the organisation uses the current rates of transactions.

Consolidated financial statements:

combine like items of assets, liabilities, equity, income, expenses and cash flows of the parent with those of its subsidiaries;

eliminate the carrying amount of the parent's investment in each subsidiary and the parent's portion of equity of each subsidiary;

and eliminate in full intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the group (profits or losses resulting from intragroup transactions that are recognised in assets, such as inventory and fixed assets, are eliminated in full). Intragroup losses may indicate an impairment that requires recognition in the consolidated financial statements. AASB 112 Income Taxes applies to temporary differences that arise from the elimination of profits and losses resulting from intragroup transactions.

If the unrealised profit relates to sales made by Bells Ltd, then no adjustments are necessary when calculating non-controlling interests in Torquay Ltd.

If unrealised profit relates to a sale of the plant made by Torquay Ltd then adjustments will be necessary when calculating non-controlling interests in Torquay Ltd.

Required

Prepare consolidated financial statements of Bells Ltd and its controlled entity for the reporting period ending 30 June 2018 in MS-Excel. (Follow the formats of the templates provided (Template A-E) to prepare consolidated financial statements in MS Excel.

To prepare the above specified financial statements, you will be required to:

1. Prepare the required journal entries: (including tax affected accounts and shareholder's funds) To be recorded in the space provided in this document.
2. To eliminate Bells Ltd.'s investment in Torquay Ltd at the acquisition date.
3. Toeliminate intercompany sales because, from the perspective of the economic entity, the sales did not involve external parties. This will ensure that we do not overstate the total sales of the economic entity.
4. To eliminate unrealised profit in closing inventory.
5. For consideration of the tax paid or payable on the sale of inventory that is still held within the group
6. For sale of inventory from Bell ltd. To Torquay Ltd.
7. Elimination of unrealised profit in closing inventory.
8. For consideration of the tax paid or payable on the sale of inventory that is still held within the group
9. For unrealised profit in opening inventory
10. For reversal of profit recognised on the sale of asset and reinstatement of cost and accumulated depreciation
11. For tax implications of the intragroup sale of the plant.
12. To reinstate accumulated depreciation in the statement of financial position
13. For consideration of the tax effect of the reduction in depreciation expense.
14. For impairment of goodwill
15. For elimination of intragroup transactionsmanagement fees
16. Dividends paid
17. Dividends declared
18. Dividends receivable
19. The non-controlling interests on the acquisition date.
20. The non-controlling interest in movements in contributed equity and reserves between the date of the parent entity's acquisition and the beginning of the current reporting period.
21. The non-controlling interest in the current period's profit, as well as movements in reserves in the current period. In determining the non-controlling interest's share of current period profit or loss, gains and losses of the subsidiary that are unrealised from the economic entity's perspective will need to be adjusted for.
22. Dividends paid by Torquay Ltd
23. Calculate non-controlling interest and prepare journal entries for the following:
24. Transfer the above consolidation journal entries to the consolidation worksheet. (Template A)
25. Prepare the consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2018. (Template B)
26. Consolidated statement of changes in equity for the year ended 30 June 2018 for Bells Ltd and its controlled entity for Bells Ltd and its controlled entity. (Template C)
27. Statement of changes in equity for the year ended 30 June 2018 for Bells ltd. (Template D)
28. Consolidated statement of financial position at 30 June 2018 for Bells Ltd and its controlled entity. (Template E)

When preparing the above-specified statements, make sure that you:

1. Record data in financial statements by following accounting standards:

• AASB 10, Consolidated Financial Statements
• AASB 116 Property, Plant and Equipment
• AASB 136 Impairment of Assets
• AASB 13 Fair Value Measurement
• AASB 102 Inventories

1. Code, classify and check data for accuracy and reliability in accordance with organisational policy, procedures.
2. Identify and record the effects of taxation
3. Ensure the structure and format of reports are clear and conform to statutory requirements and organisational procedures.
4. Ensure that the financial statements are error-free.
5. Transfer the data into MS Excel. Use the format of templates provided.

You must attach the spreadsheet with this assessment task.

Space for journal entries to be performed.

Particulars	Debit	Credit
Elimination of Investment in Torquay Ltd
Share Capital-Torquay Ltd	$1,500,000
Retained Earnings-Torquay Ltd	$700,000
Investment in Torquay Ltd		$2,000,000
Non-Controlling Interest		$200,000
Elimination of Intercompany Sales and Profits
Sales from Bells to Torquay ($30,000) with 50% unsold:
Sales Revenue	$30,000
Cost of Goods Sold		$30,000
Cost of Goods Sold (Unrealised profit:50% of ($30,000-$22,000))	$4,000
Inventory		$4,000
Sales from Torquay to Bells ($20,000) with 40% unsold
Sales Revenue	$20,000
Cost of Goods Sold		$20,000
Cost of Goods Sold (Unrealised profit: 40% of ($20,000-14,000))	$2,400
Inventory		$2,400
Prior year sale from Torquay to Bells with 20% unsold:
Retained Earnings (Unrealised profit: 20% of ($11,000-$8,000))	$600
Inventory		$600
Adjustments for Dividends
Dividends Receivable	$8,000
Dividends Payable		$8,000
Elimination of Intercompany Transactions
Management Fees:
Other Revenue	$10,000
Other Expenses		$10,000
Goodwill Impairment
Goodwill Impairment	$12,000
Goodwill		$12,000
Non-controlling Interest (20% of $12,000)	$2,400
Goodwill Impairment		$2,400
Unrealised Profit on Sale of Plant
Gain on Sale of Plant ($45,000-$25,000)	$20,000
Plant		$20,000
Accumulated Depreciation (10 years, $2,000/year)	$2,000
Depreciation Expense		$2,000
Non-Controlling Interest (20% of $20,000)	$4,000
Gain on Sale of Plant		$4,000
Depreciation Adjustment
Depreciation Expense	$2,000
Accumulated Depreciation		$2,000
Dividends paid by Torquay Ltd
Non-Controlling Interest (20% of $10,000)	$2,000
Dividends Paid		$2,000

Template A: Consolidation worksheet

	Eliminations and adjustments
	Bells Ltd ($000)	Torquay Ltd ($000)	Dr ($000)	Cr ($000)	Consolidated statements ($000)
A detailed reconciliation of opening and closing retained earnings
Sales revenue	480	115	50	50	545
Cost of goods sold	100	40	6.4	6.4	133.6
Other expenses	80	15	10	10	85
Other Income	70	25	10	10	85
Profit before tax	370	85			455
Tax expense	60	30			90
Profit for the year	310	55			365
Non-controlling interest in earnings					200
Retained earnings30 June 2017	1000	800	0.6	0.6	1800.6
	1310	855			2165
Dividends paid	160	30	2	2	188
Dividend declared	40	10	8	8	42
Retained earnings30 June 2018	1110	815			1925
Statement of financial position
Shareholders' equity
Share capital	4,000	1,500			5,500
Retained earnings b/d	1,100	815			1915
Non-controlling interest					200
Current liabilities
Accounts payable	20	30			50
Dividends payable	40	10			50
Non-current liabilities
Loans	600	250			850
Total of liabilities and equity	5770	2605	26.4	26.4	8348.6
Current assets
Cash	150	25			175
Accounts receivable	242	175			417
Dividends receivable	8	-	8	8	0
Inventory	500	300	7	7	793
Land	1400	1105			2505
Plant	1870	1300	2	2	3168
Accumulated depreciation	400	300	2	2	698
Investment in Torquay Ltd	2000		2000	2000	0
Total assets	5770	2605			8375

Template B: Consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2018

	Group	Bells Ltd
Revenue	545	480
Cost of goods sold	133.6	100
Gross profit	411.4	380
Other Income	85	70
Other expenses	85	80
Profit before tax	411.4	370
Income tax expense	90	60
Profit for the year	321.4	310
Other comprehensive income	_	_
Total comprehensive income	321.4	310
Profit attributable to:
Owners of the parent	303.4
Non-controlling interest	18
Total comprehensive income attributable to:
Owners of the parent	303.4
Non-controlling interest	18

Template C: Consolidated statement of changes in stakeholder equity for the year ended 30 June 2018

Attributable to owners of the parent
	Share capital ($)	Retained earnings ($)	Total ($)	Non-controlling interest ($)	Total equity ($)
Balance at 1 July 2017	4000	1000	5000	172	5,172
Total comprehensive income for the year	-	303.4	303.4	18	321.4
Dividends	-	160	160	2	162
Balance at 30 June 2018	4000	1143.4	5143.4	188	5331.4

Template D: Statement of changes in equity for the year ended 30 June 2018

	Share capital ($)	Retained earnings ($)	Total equity ($)
Balance at 1 July 2017	4000	1000	5000
Total comprehensive income for the year	-	310	310
Distributions	-	160	160
Balance at 30 June 2018	4000	1,150	5,150

Template E: Consolidated statement of financial position at 30 June 2018 for Bells Ltd and its controlled entity

	Group ($0)	Bells Ltd ($0)
Consolidated statement of financial position
Current assets
Inventory	800	500
Accounts receivable	417	242
Dividend receivable	-	8
Cash	175	150
Total current assets	1392	900
Non-current assets
Land	2,505	1,400
Plant	3,170	1,870
Accumulated depreciation	700	400
Goodwill	12	-
Accumulated impairment loss	24	-
Investment in Torquay Ltd	-	2000
Deferred tax asset	125	-
Total non-current assets	5136	4870
Total assets	6,528	5,770
Current liabilities
Accounts payable	50	20
Dividends payable	50	40
Total current liabilities	100	60
Non-current liabilities
Loans	850	600
Total non-current liabilities	850	600
Total liabilities	950	660
Net assets
Equity
Share capital	4000	4000
Retained earnings	1,925	1,110
Non-controlling interest	200	-
Total equity	6,125	5,110