Kent Ltd owns all the share capital of Lodh Ltd. That is, Lodh Ltd is a wholly own subsidiary of Kent Ltd. Required: In relation to the following intra-group transactions, prepare the consolidation worksheet adjusting entries for the preparation of consolidated financial statements as of 30 June 2020. All parts are independent unless specified. Assume an income tax rate of 30% and that all income on sale of assets is taxable and expenses are deductible.
Kent Ltd owns all the share capital of Lodh Ltd. That is, Lodh Ltd is a wholly own subsidiary of Kent Ltd.
Required:
In relation to the following intra-group transactions, prepare the consolidation worksheet
a. On 1 January 2020, Kent Ltd sold inventory costing $10,000 to Lodh Ltd at a transfer (sale) price $16,000. Lodh Ltd sold half of this inventory to an external party for $10,000 (i.e., half of the inventory is remained with Lodh Ltd at the end of the year).
b. During March 2018, Lodh Ltd paid a $5,500 interim dividend.
c. Kent Ltd rented a spare warehouse to Lodh Ltd. The total charge for the rental was $6,000. Lodh Ltd paid the whole amount to Kent Ltd during the year.
d. On 1 July 2019, Kent Ltd sold an item of plant costing $15 000 to Lodh Ltd for $18 000. PIA Ltd had not charged any depreciation on the plant before the sale. Both entities
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