Required. Prepare the consolidation journal entries required to eliminate the above intragroup transactions for the year ended 30 June 2021. Assume a tax rate of 30%
Required. Prepare the consolidation journal entries required to eliminate the above intragroup transactions for the year ended 30 June 2021. Assume a tax rate of 30%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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100%
Accounting
Transcribed Image Text:On 1 July 2020 S Ltd acquired 60% of the issued shares of P
Ltd. During the year ended 30 June 2021 the following intra
group transactions occurred:
a) Sales of inventory: P Ltd to S Ltd $200,000 (Cost to P Ltd
$150,000)
b) Intragroup inventory on hand 30 June 2021: S Ltd held 40%
of the inventory acquired from P Ltd
c) Intragroup sale of equipment An item of equipment
originally acquired by S Ltd on 1 July 2018 at a cost of
$200,000 was sold to P Ltd on 1 July 2020 for $170,000. S
Ltd had depreciated this asset at 10% per annum on a
straight line basis with no scrap value. Subsequent to the
sale the expected useful life of the asset is a further 4 years.
d) During the year ended 30 June 2021 the following dividends
were paid:
- S Ltd
- P Ltd
$10,000
$2,000
e) On 31 December 2020 S Ltd lent P Ltd $100,000. Interest
on this loan at 6% was paid up to 30 June 2021.
f) During the year ended 30 June 2021 P Ltd paid S Ltd $4,000
for management services.
Required.
Prepare the consolidation journal entries required to
eliminate the above intragroup transactions for the year
ended 30 June 2021. Assume a tax rate of 30%
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