On 

$1$ July $2022,$ Ambrose Ltd acquired all voting rights of Beatrice Ltd by purchasing

its shareholders' equity for $$40,000$ cash and issuing $50,000$ shares at $$1$ each. Beatrice

had $$66,000$ share capital and $$10,000$ retained earnings at that date.

On $1$ July $2022,$ the following assets were at carrying value on the balance sheet,

which differed from fair value.

Carrying amount $ Fair value $

Plant $($$$150,000)125,000130,000$

Patent $60,00075,000$

Inventory $20,00025,000$

Following are additional information.

$1)$ The estimated useful life of the Plant was five years.

$2)$ The patent was sold for $$80,000$ to an external party on $1$ August $2022.$

$3)$ The inventory held was sold to an external party on $31$ January $2023.$

$4)$ Ambrose Ltd has sold inventory type A to Beatrice Ltd and had such

inventory on $1$ July $2023$ worth $$5,000.$ They were sold on $31$ August $2023$ to

an external party at a $$1,000$ profit.

$6$ Prepared by Prof Indra Abeysekera $22$ March $2024$

 

 

$5)$ On $1$ September $2023,$ Beatrice sold inventory Type B to Ambrose Ltd$.$ at a

profit of $$500.$ On $30$ June $2024,$ Ambrose Ltd$.$ had them unsold.

$6)$ On $1$ July $2023,$ Beatrice Ltd$.$ sold a Plant to Ambrose Ltd for $$15,000,$ which

classified it as inventory. On $1$ November $2023,$ Ambrose sold it to an external

party for a profit of $$1,000.$

$7)$ The company income tax rate is $30\%.$

The following is information from the financial statements of Ambrose Ltd and

Beatrice Ltd for the year ended $30$ June $2024.$

Ambrose Beatrice

Dr Cr Dr Cr

Sales revenue $76,25085,950$

Cost of sales $41,40053,350$

Trading expenses $5,00010,500$

Office expenses $6,0005,500$

Depreciation expenses $1,8003,900$

Proceeds on sale of plant $9,00015,000$

Carrying amount of plant

sold

$7,50012,000$

Income tax expenses $2,1007,300$

Share capital $87,00066,000$

Retained earnings $48,00031,500$

Current liabilities $21,10010,500$

Deferred tax liability $11,00015,000$

Plant $57,000105,000$

Accumulated depreciation

of Plant

$19,80031,200$

Intangibles $12,00011,100$

Deferred tax asset $11,1009,450$

Shares in Beatrice $90,000-$

Inventory $30,00024,600$

Receivables $8,25012,450$

$272,150272,150255,150255,150$

$7$ Prepared by Prof Indra Abeysekera $22$ March $2024$

Required:

Prepare consolidation worksheet to prepare consolidated financial statements of

Ambrose Ltd as of $30$ June $2024.$

$1.$ Acquisition analysis $[5$ marks$]$

$2.$ Consolidation of journal entries $[10$ marks$]$

$3.$ Consolidation worksheet $[15$ marks$]$

$4.$ Consolidated statement of Profit and loss and other comprehensive income $[5$

marks$]$

$5.$ Consolidated statement of financial position. $[10$ marks$]$

$6.$ Consolidated statement of changes in equity. $[5$ marks$]$