Requirea: In relation to the folowing intro-group transactions, prepare the consoliaation worksheet oojusting entries for the preparation of consoliaatea financial statements as of 30 June 2020. All parts are independent uniesS specifiea. Assume an income tax rate of 30 and that all income on sale of assets is taxoble and expenses are deductibie.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Kent Ltd owns all the share capital of Lodh Lta. That is, Lodh Ltd is a wholly own subsidiary of Kent Ltd.
Requirea:
In relation to the following intro-group transactions, prepare the consolidation worksheet aajusting entries for
the preparation of consolidatea financial stoatements as of 30 June 2020. AJll 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.
a. On 1 January 2020, Kent Ltd sold inventory costing $10,000 to Lodh Ltd at a transfer (sole) price $16,.000. Loah
Ltd sold half of this inventory to an external party for $10,000 (i.e., naif of the inventory is remoined with Lodh Ltd
at the end of the year).
b. During March 2018, Lodn Lta paid a $5,500 interim oaividend.
C. Kent Ltd rented a spare warehouse to Lodh Lta. The total charge for the rental was $6,000. Loah Ltd paid the
whole amount to Kent Ltd during the year.
a. 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 depreciate assets at 10% p.o. on
cost.
Transcribed Image Text:Kent Ltd owns all the share capital of Lodh Lta. That is, Lodh Ltd is a wholly own subsidiary of Kent Ltd. Requirea: In relation to the following intro-group transactions, prepare the consolidation worksheet aajusting entries for the preparation of consolidatea financial stoatements as of 30 June 2020. AJll 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. a. On 1 January 2020, Kent Ltd sold inventory costing $10,000 to Lodh Ltd at a transfer (sole) price $16,.000. Loah Ltd sold half of this inventory to an external party for $10,000 (i.e., naif of the inventory is remoined with Lodh Ltd at the end of the year). b. During March 2018, Lodn Lta paid a $5,500 interim oaividend. C. Kent Ltd rented a spare warehouse to Lodh Lta. The total charge for the rental was $6,000. Loah Ltd paid the whole amount to Kent Ltd during the year. a. 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 depreciate assets at 10% p.o. on cost.
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