Penny Ltd, a reporting entity, acquired 100% of the issued shares of Lane Ltd on 1 July 2016. The transactions below represent intra-group transactions relevant to the consolidated financial statements for the 2020 (1 July 2019 to 30 June 2020) financial year. • On 1 July 2017, Penny Ltd sold an item of plant to Lane Ltd for $320,000. At the date of sale, the plant had an original cost to Penny Ltd of $300,000 and accumulated depreciation of $60,000. At 1 July 2017, the plant had a remaining useful life of 4 years and zero residual value. Both Penny Ltd and Lane Ltd use the straight-line depreciation method for plant and equipment. The company income tax rate is 30%. Required: Show the consolidation adjustment entries needed to eliminate the above intra-group transactions for financial year ended 30 June 2020 in accordance with AASB 10 Consolidated Financial Statements. f no entry is required, please provide a brief explanation why you believe a consolidation adjusting entry is not required. • Include all narrations.

Penny Ltd, a reporting entity, acquired 100% of the issued shares of Lane Ltd on 1 July 2016. The transactions below represent intra-group transactions relevant to the consolidated financial statements for the 2020 (1 July 2019 to 30 June 2020) financial year. • On 1 July 2017, Penny Ltd sold an item of plant to Lane Ltd for $320,000. At the date of sale, the plant had an original cost to Penny Ltd of $300,000 and accumulated depreciation of $60,000. At 1 July 2017, the plant had a remaining useful life of 4 years and zero residual value. Both Penny Ltd and Lane Ltd use the straight-line depreciation method for plant and equipment. The company income tax rate is 30%. Required: Show the consolidation adjustment entries needed to eliminate the above intra-group transactions for financial year ended 30 June 2020 in accordance with AASB 10 Consolidated Financial Statements. f no entry is required, please provide a brief explanation why you believe a consolidation adjusting entry is not required. • Include all narrations.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Question

Penny Ltd, a reporting entity, acquired 100% of the issued shares of Lane Ltd on 1 July 2016. The transactions below represent intra-group transactions relevant to the consolidated financial statements
for the 2020 (1 July 2019 to 30 June 2020) financial year.
On 1 July 2017, Penny Ltd sold an item of plant to Lane Ltd for $320,000. At the date of sale, the plant had an original cost to Penny Ltd of $300,000 and accumulated depreciation of $60,000. At 1
July 2017, the plant had a remaining useful life of 4 years and zero residual value. Both Penny Ltd and Lane Ltd use the straight-line depreciation method for plant and equipment.
The company income tax rate is 30%.
Required:
Show the consolidation adjustment entries needed to eliminate the above intra-group transactions for financial year ended 30 June 2020 in accordance with AASB 10 Consolidated Financial
Statements.
If no entry is required, please provide a brief explanation why you believe a consolidation adjusting entry is not required.
• Include all narrations.

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