ACCT4104_Advauance ?nancial accounting Tutorial question for Ch.21: Ex 21.7 Exercise 21.? Consolidation worksheet Cepheus Ltd gained control of Aquarius Ltd by acquiring its share capital on 1 January 2013. The statement of ?nancial position of Aquarius Ltd at that date showed: Land :13 20,000 Liabilities £ 15,000 Plant and machinery 120,000 Share capital 60,000 Accumulated depreciation (20,000) Retained eamings 40,000 Inventory w Asset revaluation surplus m At 1 January 2013, the recorded amounts of Aquarius Ltd's assets and liabilities were equal to their fair values except as follows: . : Carrying amount Fair value Plant and machinery £100,000 £102,000 Inventory 15,000 18 ,000 Half of this inventory was sold by Aquarius Ltd in the following 12 months. The depreciable assets have a further 5-year life, bene?ts being received evenly over this period. Any business combination valuation adjustments are made on consolidation. The tax rate is 30%. At 31 December 2013, the following information was obtained from both entities: Cepheus Ltd Aquarius Ltd Land — £ 20,000 Plant and machinery £575,000 120,000 Accumulated depreciation (20,000) (25 ,000) [nventmy 15,000 23,000 Investment in Aquarius Ltd 130,000 : Total assets £700,000 £138,000 Total liabilities £ 42,000 £ 4,000 Pro?t before tax 100,000 15,000 Income tax expense (20,000) (5,000) Pro?t for the year 80,000 10,000 Retained earnings {111113) 103.000 m 133,000 50,000 Retained earnings {3131203) I 133,000 50,000 Share capital 445,000 60,000 Retained earnings 173 ,000 46,000 Asset revaluation surplus: M M H J £700,000 £138,000 " This reserve relates to certain items of plant. At 11"11'13, the balances ofthe account were £15 000 for Cepheus Ltd and £20 000 for Aquarius Ltd.

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