The following intragroup transactions took place during the period ended 30 June 2022:Heart Ltd paid $25 000 during the period ended 30 June 2022 as management fees for services provided by Clear Ltd.During the period ended 30 June 2022, Heart Ltd declared a final dividend of $12 000 out of post-acquisition profits.Heart Ltd rented a spare warehouse to Clear Ltd starting from 31 December 2021 for 1 year. The total charge for the rental was $40 000, and Clear Ltd will pay this amount to Heart Ltd at 31 December 2022.RequiredIn relation to the above intragroup transactions:1. Prepare adjusting journal entries for the consolidation worksheet at 30 June 2022.2. Explain in detail why you made each adjusting journal entry, whether there is a tax effect and if the NCI share of equity required adjustment.

Non-Controlling Interest (NCI) is the share of equity ownership not attributable to an acquirer with…

Answered: The following intragroup transactions…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following intragroup transactions took place during the period ended 30 June 2022:

Heart Ltd paid $25 000 during the period ended 30 June 2022 as management fees for services provided by Clear Ltd.
During the period ended 30 June 2022, Heart Ltd declared a final dividend of $12 000 out of post-acquisition profits.
Heart Ltd rented a spare warehouse to Clear Ltd starting from 31 December 2021 for 1 year. The total charge for the rental was $40 000, and Clear Ltd will pay this amount to Heart Ltd at 31 December 2022.

Required

In relation to the above intragroup transactions:

1. Prepare adjusting journal entries for the consolidation worksheet at 30 June 2022.

2. Explain in detail why you made each adjusting journal entry, whether there is a tax effect and if the NCI share of equity required adjustment.

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