The financial statements of P Co and its subsidiaries and associate are as follows:

Additional information

1. The fair values of identifiable net assets of Y Co were close to their book values on 1 July 20x0 and 1 January 20x1.
The estimated useful life of intangible assets of Z Co was 5 years, but the recoverable amount on 31 December 20x3 was assessed to be $100,000.
2. The provision for claims of X Co was settled in full during 20x1 for $170,000.
3. On 1 July 20x3, Z provided new electrical equipment to P Co at the invoiced price of $120,000. The original cost was $200,000 and the net book value was $60,000. The estimated useful life of the equipment was 3 years. Z Co recognized a profit of $$60,000 on the sale. Due to operational changes, the estimated recoverable amount of the equipment as at 31 December 20x3 was $60,000.
4. On 1 October 20x2, Y sold inventory to P Co at the transfer price of $130,000. The original cost and carrying amount of the inventory was $70,000. Percentage resold to third parties were as follows:

5. Apply a tax rate of 20% on all appropriate adjustments. Recognize tax effects on fair value adjustments. Companies recognize impairment losses, if any, at the financial year-end.

Requirement

Prepare the consolidation and equity accounting entries for the year ended 31 December 20x3.

Transcribed Image Text:

Profit before tax... Tax....... Profit after tax Income to NCI Dividends declared..... Income Statement for year ended 31 December 20x3 P Co X Co Z Co Profit retained..... Retained earnings, 1 Jan 20x3... Retained earnings, 31 Dec 20x3... Y Co 6,273,000 2,840,000 1,071,000 550,000 (1,254,600) (568,000) (214,200) (110,000) 5,018,400 2,272,000 856,800 440,000 (320,000) (240,000) (60,000) (65,000) 4,698,400 2,032,000 796,800 375,000 4,530,000 1,280,000 474,000 900,000 9,228,400 3,312,000 1,270,800 1,275,000 Consolidated