Current and prior periods intragroup transfers of inventories LO2, 3 Amani Ltd owns all of the

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Current and prior periods intragroup transfers of inventories  LO2, 3 Amani Ltd owns all of the share capital of Rebecca Ltd. The income tax rate is 30%. The following transactions took place during the periods ended 30 June 2019 or 30 June 2020.

(a) In January 2020, Amani Ltd sells inventories to Rebecca Ltd for $15 000 in cash. This inventories had previously cost Amani Ltd $10 000, and remain unsold by Rebecca Ltd at the end of the period.

(b) In February 2020, Amani Ltd sells inventories to Rebecca Ltd for $17 000 in cash. These inventories had previously cost Amani Ltd $12 000 and are on-sold externally on 2 April 2020.

(c) In February 2020, Rebecca Ltd sells inventories to Amani Ltd for $22 000 in cash (original cost to Rebecca Ltd was $16 000) and half are on-sold externally by 30 June 2020.

(d) In March 2020, Amani Ltd sold inventories for $10 000 to Zara Ltd, an external entity. These inventories were transferred from Rebecca Ltd on 1 June 2019. The inventories had originally cost Rebecca Ltd $6000, and were sold to Amani Ltd for $12 000. Required In relation to the above intragroup transactions: 1. prepare adjusting journal entries for the consolidation worksheet at 30 June 2020 2. explain in detail why you made each adjusting journal entry.

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Financial Reporting

ISBN: 978-0730363361

2nd Edition

Authors: Janice Loftus ,Ken Leo ,Sorin Daniliuc ,Belinda Luke ,Hong Nee Ang ,Karyn Byrnes

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