Jenny Jones is the assistant accountant for the Anzac Ltd corporate group. Jenny has recorded the following entries in the consolidation worksheet for the year ended 30 June 2023, using a tax rate of 30%: Anzac Ltd sold plant to its subsidiary company on 1 July 2022 for $100,000. This plant had a carrying amount of $35,000. The subsidiary plans to use this plant as an item of inventory. This plant was depreciated by Anzac Ltd at a rate of 10% on cost. Account Name Debit $ Credit $ Sales 100,000 Cost of goods sold expense 35,000 Plant 65,000 Deferred Tax Asset (DTA) 19,500 Income Tax Expense (ITE) 19,500 Accumulated Depreciation 6,500 Depreciation Expense 6,500 As the group accountant of Anzac Ltd, you are required to review Jenny’s worksheet entries. Apply appropriate referencing and technical knowledge to address the following: (a) For each transaction above, identify all errors or omissions by Jenny and explain the reason why the entry is incorrect in accordance with the relevant Australian (International) accounting standards. (b) In your discussion, provide all the correct consolidation worksheet entries required for each of the above transactions for the Anzac Ltd group, as at 30 June 2023. Explain which account and amount will be debited and credited. Include any tax effects in your discussion.
Jenny Jones is the assistant accountant for the Anzac Ltd corporate group. Jenny has recorded the following entries in the consolidation worksheet for the year ended 30 June 2023, using a tax rate of 30%:
Anzac Ltd sold plant to its subsidiary company on 1 July 2022 for $100,000. This plant had
a carrying amount of $35,000. The subsidiary plans to use this plant as an item of inventory. This plant
was
| Account Name | Debit $ | Credit $ |
| Sales | 100,000 | |
| Cost of goods sold expense | 35,000 | |
| Plant | 65,000 | |
| 19,500 | ||
| Income Tax Expense (ITE) | 19,500 | |
| 6,500 | ||
| Depreciation Expense | 6,500 |
As the group accountant of Anzac Ltd, you are required to review Jenny’s worksheet entries. Apply
appropriate referencing and technical knowledge to address the following:
(a) For each transaction above, identify all errors or omissions by Jenny and explain the reason why the
entry is incorrect in accordance with the relevant Australian (International) accounting standards.
(b) In your discussion, provide all the correct consolidation worksheet entries required for each of the
above transactions for the Anzac Ltd group, as at 30 June 2023. Explain which account and amount will
be debited and credited. Include any tax effects in your discussion.
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