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    Hero LTD and Silver LTD Consolidation Journal entries and balance sheet

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    Question 1

    The balance sheet of Hero Ltd (H Ltd) and Silver Ltd (S Ltd) as at 31 December 2009 are as shown below:
    H Ltd S Ltd
    $000 $000
    Tangible fixed assets
    Land and building 4,000 2,000
    Plant and machinery 5,500 800
    Investments 9,500 2,800
    Shares in S Ltd 2,100
    Other investments 500
    2,600
    Current assets
    Inventory 400 200
    Trade receivables 200 100
    Current account with S Ltd 1,300
    Cash 2,400 1,500
    4,300 1,800
    Current liabilities
    Trade payables (1,200) (400)
    Current account with H Ltd 0 (800)
    Dividends payable (1,000) (400)
    2,100 200
    Total net assets 14,200 3,000
    Share capital 10,000 2,000
    Retained earnings 4,200 1,000
    Total equity 14,200 3,000

    Hero Ltd acquired 60% of the share capital of Silver Ltd on 1 January 2007 when the retained earnings of S Ltd were $500,000.
    On 31 December 2009, S Ltd sent a cheque to H Ltd for $200,000 and also goods in transit of $300,000. Both cash and goods were not received by H Ltd until 1 January 2010.
    H Ltd has not included any entries in its accounts relating to the dividend receivable from S Ltd.
    30% of the goodwill is to be written off as an impairment loss in 2009.

    Required:

    1 Prepare the consolidation journal entries for H Ltd & S Ltd.
    2 Prepare a consolidated balance sheet for H Ltd as at 31 December 2009 showing the adjustment by using a worksheet.

    © BrainMass Inc. brainmass.com June 4, 2020, 12:12 am ad1c9bdddf
    https://brainmass.com/business/financial-statements/hero-ltd-silver-ltd-consolidation-journal-entries-325141

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    Solution Summary

    Hero LTD and Silver LTD consolidation journal entries and balance sheets are examined.

    $2.19

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