Based on the information provided below, prepare appropriate consolidation journal entries for possible account adjustment or elimination. Reference appropriate accounting standards to explain the approach which needs to be taken for the adjusting journals. Parent paid $110 000 on 30 June for all the shares of Subsidiary, whose equity at that date is share capital $72 000 and retained profits $28 000. However, the assets of Subsidiary are not all recorded at their fair value. Assume that all companies adopt the revaluation model under AASB 116. The discrepancies are: Carrying Amount $ Fair Value Investments 26 000 54 000 Accounts receivable 14 000 8 000 PPE 26 000 12 000 Inventory 70 000 76 000 Franchise Nil 10 000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Based on the information provided below, prepare appropriate consolidation journal entries for
possible account adjustment or elimination.
Reference appropriate accounting standards to explain the approach which needs to be taken for the
adjusting journals.
Parent paid $110 000 on 30 June for all the shares of Subsidiary, whose equity at that date is share
capital $72 000 and retained profits $28 000. However, the assets of Subsidiary are not all recorded
at their fair value. Assume that all companies adopt the revaluation model under AASB 116. The
discrepancies are:
Carrying Amount
$
Fair Value
Investments
26 000
54 000
Accounts receivable
14 000
8 000
PPE
26 000
12 000
Inventory
70 000
76 000
Franchise
Nil
10 000
Transcribed Image Text:Based on the information provided below, prepare appropriate consolidation journal entries for possible account adjustment or elimination. Reference appropriate accounting standards to explain the approach which needs to be taken for the adjusting journals. Parent paid $110 000 on 30 June for all the shares of Subsidiary, whose equity at that date is share capital $72 000 and retained profits $28 000. However, the assets of Subsidiary are not all recorded at their fair value. Assume that all companies adopt the revaluation model under AASB 116. The discrepancies are: Carrying Amount $ Fair Value Investments 26 000 54 000 Accounts receivable 14 000 8 000 PPE 26 000 12 000 Inventory 70 000 76 000 Franchise Nil 10 000
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