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. Both entities use the perpetual inventory method. • During the year ended 30 June 2020, Lane Ltd sold goods to Penny Ltd for $225,000. These goods had cost Lane Ltd $150,000. At financial year-end, 25% of these goods remained in Penny Ltd's inventory. The company income tax rate is 30%. Required: Show the consolidation adjustment entries needed to eliminate the above intra-group transaction 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.

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. Both entities use the perpetual inventory method. • During the year ended 30 June 2020, Lane Ltd sold goods to Penny Ltd for $225,000. These goods had cost Lane Ltd $150,000. At financial year-end, 25% of these goods remained in Penny Ltd's inventory. The company income tax rate is 30%. Required: Show the consolidation adjustment entries needed to eliminate the above intra-group transaction 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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: H has a 75% owned subsidiary S. During the year ending 31 December 2021 H sold inventory to S for…

A: Lets understand the basics. When transaction of inventory happen between inter company then there is…

Q: Let Company owns 80% of Tam Corp.’s common stock. During October 2019 Tam sold merchandise to Let…

A: The question is multiple choice question and related to Consolidated Financial Statements.

Q: 1.County Street Ltd acquired 60% of the shares of Trilogy Ltd in 2021 for R896 000 when Trilogy Ltd…

A: Let's break down the pro-forma consolidation journal entries for County Street Ltd Group for the…

Q: Sky Ltd acquired all the issued shares of Jupiter Ltd on 1 January 2019. The following transactions…

A: The journal entry can be defined as the process to record the business transaction in the accounting…

Q: Use the following to answer questions 8 through 10: On May 1, 2021, Jazzie Co. agreed to sell the…

A: SOLUTION- WORKING NOTE- GAIN ON ASSET SALE = ($80 MILLION - $ 48 MILLION)…

Q: Liala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The following transactions…

A: Hey, since there are multiple questions posted, we will answer the first question. If you want any…

Q: Squid Corporation, a 90% owned subsidiary of Penguin Corporation, sold inventory items to its parent…

A: The objective of the question is to calculate the minority interest income in the consolidated…

Q: Q2. Sky Ltd acquired all the issued shares of Jupiter Ltd on 1 January 2019. The following…

A: The journal entry can be defined as the process to record the business transaction in the accounting…

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. Both entities use the perpetual inventory method.
During the year ended 30 June 2020, Lane Ltd sold goods to Penny Ltd for $225,000. These goods had cost Lane Ltd $150,000. At financial year-end, 25% of these goods remained in Penny Ltd's
inventory.
The company income tax rate is 30%.
Required:
Show the consolidation adjustment entries needed to eliminate the above intra-group transaction 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.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Kent Ltd owns all of the shares of Lodh Ltd. In relation to the following intragrouptransactions, all parts of which are independent unless specified, prepare theconsolidation worksheet adjusting entries for preparation of the consolidated financialstatements as at 30 June 2020. Assume an income tax rate of 30%. 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…
H has a 75% owned subsidiary S. During the year ending 31 December 2021 H sold inventory to S for an invoice price of £800,000. S have since sold 75% of that inventory to third parties. The sale was at a mark-up of 25%on cost to H. S is the only subsidiary of H. What is the adjustment to inventory that would be included in the consolidated statement of financial position of H at the year-ending 31 December 2021 resulting from this sale? Show you calculations.
P Co acquired an 80% interest in S Co on 1/1/2023 when the book values of S assets and liabilities were equal to their fair values. The cost of the 80% interest was equal to 80% of the book value of S net assets. During 2023,P sold merchandise that cost $86,000 to S for $70,000. On 31/12/2014, three-fourths of the merchandise acquired from P remained in S inventory. Separate incomes (investment income not included) of the two companies are as follows: P S Sales Revenue 160,000 Cost of Goods Sold 90,000 Operating Expenses 21,000 Select one: O Separate incomes 49,000 What is P income from S for 2023? a. $29,600 b. $39,200 180,000 c. $49,000 d. $ 51,200 120,000 17,000 43,000
a) Liala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The following transactions occurred between the two entities:  On 1 June 2016, Liala Ltd sold inventory to Jordan Ltd for $12,000, this inventory previously cost Liala Ltd $10,000. By 30 June 2016, Jordan Ltd had sold 20% of this inventory to other entities for $3,000. The other 80% was all sold to external entities by 30 June 2017 for $13,000.  During the 2016–17 period, Jordan Ltd sold inventory to Liala Ltd for $6,000, this being at cost plus 20% mark-up. Of this inventory, 20 % remained on hand in Liala Ltd at 30 June 2017. The tax rate is 30%. Required: (i) Prepare the consolidation worksheet entries for Liala Ltd at 30 June 2017 in relation to the intragroup transfers of inventory. (ii) Compute the amount of cost of goods sold to be reported in the consolidated income statement for 2017 relating to the relevant intra-group sales. b) On 1 July 2016, Liala Ltd sold an item of plant to…