Current and prior period intragroup borrowings LO2, 7 Tony Ltd owns all the share capital of
Question:
Current and prior period intragroup borrowings LO2, 7 Tony Ltd owns all the share capital of Sean Ltd. The following transactions are independent.
(a) Sean Ltd gives $50 000 as an interest-free loan to Tony Ltd on 1 July 2018. Tony Ltd made a $20 000 repayment by 30 June 2019.
(b) Sean Ltd borrows $50 000 from Tony Ltd on 1 July 2018 with an interest rate of 6% p.a. The interest is to be paid annually in arrears, starting on 30 June 2019.
(c) Sean Ltd borrows $50 000 from Tony Ltd on 31 December 2018 with an interest rate of 6% p.a. The interest is to be paid annually in advance, starting on 31 December 2018.
(d) Sean Ltd borrows $50 000 from Tony Ltd on 31 December 2018 with an interest rate of 6% p.a. The interest is to be paid biannually in arrears, starting on 30 June 2019.
(e) Sean Ltd borrows $50 000 from Tony Ltd on 1 July 2018 with an interest rate of 6% p.a. The interest is to be paid biannually in advance, starting on 1 July 2018. Required In relation to the above intragroup transactions: 1. prepare adjusting journal entries for the consolidation worksheet at 30 June 2019 and 30 June 2020 2. explain in detail why you made each adjusting journal entry.
Step by Step Answer:
Financial Reporting
ISBN: 978-0730363361
2nd Edition
Authors: Janice Loftus ,Ken Leo ,Sorin Daniliuc ,Belinda Luke ,Hong Nee Ang ,Karyn Byrnes