Homework answers / question archive / Financial statements of Spider Ltd and Lorikeet Ltd at 31 Dec 2013:   Spider Ltd   Lorikeet Ltd Sales revenue $ 316 000   $220 000 Other revenue:       Debenture interest revenue 5 000   - Management and consulting revenue 5 000   - Dividend from lorikeet Ltd 12 000   - Total revenues 338 000   220 000 Cost of sales 130 000   85 000 Manufacturing expenses 90 000   60 000 Depreciation on plant 15 000   15 000 Administrative 15 000   8 000 Interest expenses 11 000   5 000 Other expenses 14 000   12 000 Total expenses 275 000   185 000 Profit before tax 63 000   35 000 Income tax expense (25 000)   (17 000) Profit for the year 38 000   18 000 Other comprehensive income:       Gain/loss on FA FV change 3 000   2 000 Total comprehensive income 41 000   20 000         Profit for the year 38 000   18 000 Retained earnings (1/1/13) 50 000   45 000   88 000   63 000         Dividend Appropriation 20 000   15 000 (unpaid Spider $10 000, Lorikeet 5 000)       Retained earnings (31/12/2013) 68 000   48 000 General reserve 47 000   10 000         FA FV change reserve (1/1/13) 10 000   8 000 Gain on FA FV change (simultaneously as OCI) 3 000   2 000 FA FV change reserve (31/12/13) 13 000   10 000         Share capital 300 000   100 000         Total Equity 428 000   168 000   Debentures   200 000     100 000 Current tax liability 25 000   17 000 Dividend payable 10 000   5 000 Deferred tax liability -   7 000 Other liabilities 90 000   12 000 Total liabilities 325 000   141 000         Total liabilities and total equity $753 000   $309 000       Financial assets   50 000     60 000 Debentures in Lorikeet Ltd 100 000   - Shares in Lorikeet Ltd 131 600   - Plant (cost) 120 000   102 000 Accumulated depreciation - Plant (65 000)   (55 000) Other depreciable assets 76 000   55 000 Accumulated depreciation – Other depreciable assets (40 000)   (25 000) Inventory 90 000   85 000 Deferred tax assets 85 400   30 000 Land 201 000   57 000 Dividend receivable 4 000   - Total Assets $753 000   $309 000           Spider Ltd had acquired 80% shareholding in Lorikeet Ltd on 1 January 2011 for $131 600 when the equity of Lorikeet Ltd consisted of: Share capital (100 000 shares) $100 000 General reserve 3 000 Retained earnings 37 000   At the acquisition date, all the identifiable assets and liabilities of Lorikeet Ltd were at fair value except for the following assets:   Carrying amount Fair value Plant (cost $75 000) $ 50 000 $ 55 000 Land 30 000 38 000 The plant has an expected life of 10 years, with benefits being received evenly over that period

Financial statements of Spider Ltd and Lorikeet Ltd at 31 Dec 2013:   Spider Ltd   Lorikeet Ltd Sales revenue $ 316 000   $220 000 Other revenue:       Debenture interest revenue 5 000   - Management and consulting revenue 5 000   - Dividend from lorikeet Ltd 12 000   - Total revenues 338 000   220 000 Cost of sales 130 000   85 000 Manufacturing expenses 90 000   60 000 Depreciation on plant 15 000   15 000 Administrative 15 000   8 000 Interest expenses 11 000   5 000 Other expenses 14 000   12 000 Total expenses 275 000   185 000 Profit before tax 63 000   35 000 Income tax expense (25 000)   (17 000) Profit for the year 38 000   18 000 Other comprehensive income:       Gain/loss on FA FV change 3 000   2 000 Total comprehensive income 41 000   20 000         Profit for the year 38 000   18 000 Retained earnings (1/1/13) 50 000   45 000   88 000   63 000         Dividend Appropriation 20 000   15 000 (unpaid Spider $10 000, Lorikeet 5 000)       Retained earnings (31/12/2013) 68 000   48 000 General reserve 47 000   10 000         FA FV change reserve (1/1/13) 10 000   8 000 Gain on FA FV change (simultaneously as OCI) 3 000   2 000 FA FV change reserve (31/12/13) 13 000   10 000         Share capital 300 000   100 000         Total Equity 428 000   168 000   Debentures   200 000     100 000 Current tax liability 25 000   17 000 Dividend payable 10 000   5 000 Deferred tax liability -   7 000 Other liabilities 90 000   12 000 Total liabilities 325 000   141 000         Total liabilities and total equity $753 000   $309 000       Financial assets   50 000     60 000 Debentures in Lorikeet Ltd 100 000   - Shares in Lorikeet Ltd 131 600   - Plant (cost) 120 000   102 000 Accumulated depreciation - Plant (65 000)   (55 000) Other depreciable assets 76 000   55 000 Accumulated depreciation – Other depreciable assets (40 000)   (25 000) Inventory 90 000   85 000 Deferred tax assets 85 400   30 000 Land 201 000   57 000 Dividend receivable 4 000   - Total Assets $753 000   $309 000           Spider Ltd had acquired 80% shareholding in Lorikeet Ltd on 1 January 2011 for $131 600 when the equity of Lorikeet Ltd consisted of: Share capital (100 000 shares) $100 000 General reserve 3 000 Retained earnings 37 000   At the acquisition date, all the identifiable assets and liabilities of Lorikeet Ltd were at fair value except for the following assets:   Carrying amount Fair value Plant (cost $75 000) $ 50 000 $ 55 000 Land 30 000 38 000 The plant has an expected life of 10 years, with benefits being received evenly over that period

Accounting

Share With

---

Financial statements of Spider Ltd and Lorikeet Ltd at 31 Dec 2013:

	Spider Ltd		Lorikeet Ltd
Sales revenue	$ 316 000		$220 000
Other revenue:
Debenture interest revenue	5 000		-
Management and consulting revenue	5 000		-
Dividend from lorikeet Ltd	12 000		-
Total revenues	338 000		220 000
Cost of sales	130 000		85 000
Manufacturing expenses	90 000		60 000
Depreciation on plant	15 000		15 000
Administrative	15 000		8 000
Interest expenses	11 000		5 000
Other expenses	14 000		12 000
Total expenses	275 000		185 000
Profit before tax	63 000		35 000
Income tax expense	(25 000)		(17 000)
Profit for the year	38 000		18 000
Other comprehensive income:
Gain/loss on FA FV change	3 000		2 000
Total comprehensive income	41 000		20 000
Profit for the year	38 000		18 000
Retained earnings (1/1/13)	50 000		45 000
	88 000		63 000
Dividend Appropriation	20 000		15 000
(unpaid Spider $10 000, Lorikeet 5 000)
Retained earnings (31/12/2013)	68 000		48 000
General reserve	47 000		10 000
FA FV change reserve (1/1/13)	10 000		8 000
Gain on FA FV change (simultaneously as OCI)	3 000		2 000
FA FV change reserve (31/12/13)	13 000		10 000
Share capital	300 000		100 000
Total Equity	428 000		168 000
Debentures	200 000		100 000
Current tax liability	25 000		17 000
Dividend payable	10 000		5 000
Deferred tax liability	-		7 000
Other liabilities	90 000		12 000
Total liabilities	325 000		141 000
Total liabilities and total equity	$753 000		$309 000

 

 

Financial assets	50 000		60 000
Debentures in Lorikeet Ltd	100 000		-
Shares in Lorikeet Ltd	131 600		-
Plant (cost)	120 000		102 000
Accumulated depreciation - Plant	(65 000)		(55 000)
Other depreciable assets	76 000		55 000
Accumulated depreciation – Other depreciable assets	(40 000)		(25 000)
Inventory	90 000		85 000
Deferred tax assets	85 400		30 000
Land	201 000		57 000
Dividend receivable	4 000		-
Total Assets	$753 000		$309 000

 

Spider Ltd had acquired 80% shareholding in Lorikeet Ltd on 1 January 2011 for $131 600 when the equity of Lorikeet Ltd consisted of:

Share capital (100 000 shares)	$100 000
General reserve	3 000
Retained earnings	37 000

 

At the acquisition date, all the identifiable assets and liabilities of Lorikeet Ltd were at fair value except for the following assets:

	Carrying amount	Fair value
Plant (cost $75 000)	$ 50 000	$ 55 000
Land	30 000	38 000

The plant has an expected life of 10 years, with benefits being received evenly over that period. Differences between carrying amounts and fair values are adjusted on consolidation. The land on hand at 1 January 2011 was sold on 1 August 2011 for $40 000. Spider Ltd uses the full goodwill method. The fair value of the non-controlling interest at 1 January 2011 was $31 500.Tax rate is 30%.

 

Additional information on the intra-group transactions:

(a) Inventory on hand of Lorikeet Ltd at 1 January 2013 included a quantity priced at $10000 that had been sold to Lorikeet Ltd by its parent. This inventory had cost Spider Ltd $7500. It was all sold by Lorikeet Ltd during the year.

(b) In 2013, Lorikeet Ltd sold inventory to Spider Ltd for $60 000 and Lorikeet Ltd recorded a $5 000 profit on these transactions. At 31 Dec 2013, the inventories were still on hand.

(c) It was also learned that Lorikeet Ltd had sold to Spider Ltd an item from its inventory for $20 000 on 1 July 2012. Spider Ltd had treated this item as an addition to its plant and machinery. The item was put into service as soon as received by Spider Ltd and depreciation charged at 20% p.a on the straight-line basis. The item had been fully imported by Lorikeet Ltd at a landed cost of $15 000.

(d) Management and consulting revenue derived by Spider Ltd were all from Lorikeet Ltd and represented charges made for administration $2200 and technical services $2800. The latter were charged by Lorikeet Ltd to manufacturing expenses.

(e) All debentures issued by Lorikeet Ltd are held by Spider Ltd. Lorikeet paid $5 000 interest to Spider Ltd in 2013.

Required

Prepare the consolidated financial statements for Spider Ltd and its subsidiary, Lorikeet Ltd, for the year ended 31 December 2013.

 

					Adjustments				Group		NCI
	Spider		Lorikeet		Dr		Cr				Dr		Cr		Parent
Sales revenue	316,000		220,000
Other revenue:
Debenture interest revenue	5,000		0
Management and Consulting revenue	5,000		0
Dividend from Lorikeet Ltd	12,000		0
Total revenues	338,000		220,000
Cost of sales	130,000		85,000
Manufacturing expenses	90,000		60,000
Depreciation on plant	15,000		15,000
Administrative	15,000		8,000
Interest expenses	11,000		5,000
Other expenses	14,000		12,000
Total expenses	275,000		185,000
Profit before tax	63,000		35,000
Income tax expense	(25,000)		(17,000)
Profit for the year	38,000		18,000
Retained earnings (1/1/13)	50,000		45,000
	88,000		63,000
Dividend Appropriations	20,000		15,000
Retained earnings (31/12/13)	68,000		48,000
General reserve	47,000		10,000
FA FV change reserve (1/1/2013)	10,000		8,000
Gain on FA FV change (simultaneously as OCI)	3,000		2,000
FA FV change reserve (31/12/2013)	13,000		10,000
Share capital	300,000		100,000
Total equity	428,000		168,000
Debentures	200,000		100,000
Current tax liability	25,000		17,000
Dividend payable	10,000		5,000
DTL	0		7,000
Other liabilities	90,000		12,000
Total liabilities	325,000		141,000
Total liabilities and equity	753,000		309,000
Financial assets	50,000		60,000
Debentures in Lorikeet Ltd	100,000		0
Shares in Lorikeet Ltd	131,600		0
Plant (cost)	120,000		102,000
Accumulated depreciation - plant	(65,000)		(55,000)
Other depreciable assets	76,000		55,000
Accumulated depreciation - others	(40,000)		(25,000)
Inventory	90,000		85,000
DTA	85,400		30,000
Land	201,000		57,000
Dividend receivable	4,000		0
Total assets	753,000		309,000