AccountingCorelli Ltd acquired all the shares of Handel Ltd on 1 July 2016. During the year1 July 2016to 30 June 2017 the following transactions take place between Handel andCorelli:a) Handel has a $400 000 loan from Corelli Ltd, at an annual interest of 10%(the loan wastaken on 1 July 2016). Accruals of Corelli Ltd include $15 000 loan interest duefrom%3DHandel Ltd.b) The parent charged a $9 000 management fee. All of this was paid by 30June 2017.c) Dividends declared by Handel amount to $30 000 and Corelli, $90 000. Alldividendswere yet to be paid out.Required:Prepare journal entries required on consolidation to eliminate the intra-grouptransactions asof 30 June 2017, assuming a tax rate of 30%.

Journal entry: It is the first step of recording transactions of a company. Before this, no other…

Corelli Ltd acquired all the shares of Handel Ltd on 1 July 2016. During the year 1 July 2016 to 30 June 2017 the following transactions take place between Handel and Corelli: a) Handel has a $400 000 loan from Corelli Ltd, at an annual interest of 10% (the loan was taken on 1 July 2016). Accruals of Corelli Ltd include $15 000 loan interest due from Handel Ltd. %3D b) The parent charged a $9 000 management fee. All of this was paid by 30 June 2017. c) Dividends declared by Handel amount to $30 000 and Corelli, $90 000. All dividends were yet to be paid out. Required: Prepare journal entries required on consolidation to eliminate the intra-group transactions as of 30 June 2017, assuming a tax rate of 30%.

Corelli Ltd acquired all the shares of Handel Ltd on 1 July 2016. During the year 1 July 2016 to 30 June 2017 the following transactions take place between Handel and Corelli: a) Handel has a $400 000 loan from Corelli Ltd, at an annual interest of 10% (the loan was taken on 1 July 2016). Accruals of Corelli Ltd include $15 000 loan interest due from Handel Ltd. %3D b) The parent charged a $9 000 management fee. All of this was paid by 30 June 2017. c) Dividends declared by Handel amount to $30 000 and Corelli, $90 000. All dividends were yet to be paid out. Required: Prepare journal entries required on consolidation to eliminate the intra-group transactions as of 30 June 2017, assuming a tax rate of 30%.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Accounting
Corelli Ltd acquired all the shares of Handel Ltd on 1 July 2016. During the year
1 July 2016
to 30 June 2017 the following transactions take place between Handel and
Corelli:
a) Handel has a $400 000 loan from Corelli Ltd, at an annual interest of 10%
(the loan was
taken on 1 July 2016). Accruals of Corelli Ltd include $15 000 loan interest due
from
%3D
Handel Ltd.
b) The parent charged a $9 000 management fee. All of this was paid by 30
June 2017.
c) Dividends declared by Handel amount to $30 000 and Corelli, $90 000. All
dividends
were yet to be paid out.
Required:
Prepare journal entries required on consolidation to eliminate the intra-group
transactions as
of 30 June 2017, assuming a tax rate of 30%.

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