For each of the following independent intra-group transaction scenarios, assume that the consolidation process is done on 31 December 2020. Required: (a) Prepare the necessary consolidation journal entries in each scenario. Preston Ltd owns 80% share capital of Sutherland Ltd. The tax rate is 30%. (narrations are not required). Scenario 3: On 1 July 2018, Preston Ltd sold an item of machinery to Sutherland Ltd for $900,000. Preston Ltd originally purchased the machinery for $1,600,000 on 1 January 2016. The original estimated useful life was 5 years but at the time of the sale the remaining useful life was estimated to be 4 years by Sutherland Ltd. The expected residual value of the machinery is estimated to be $nil by Sutherland Ltd.
For each of the following independent intra-group transaction scenarios, assume that the consolidation process is done on 31 December 2020.
Required:
(a) Prepare the necessary consolidation
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Scenario 3: |
On 1 July 2018, Preston Ltd sold an item of machinery to Sutherland Ltd for $900,000. Preston Ltd originally purchased the machinery for $1,600,000 on 1 January 2016. The original estimated useful life was 5 years but at the time of the sale the remaining useful life was estimated to be 4 years by Sutherland Ltd. The expected residual value of the machinery is estimated to be $nil by Sutherland Ltd.
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