Undervalued assets, partial goodwill method, intragroup transactions   LO4, 6 On 1 July 2018, Water Ltd paid $236 400 for 75% of the issued shares of Rat Ltd. At this date, the equity of Rat Ltd consisted of: Share capital (200 000 shares) $200 000 General reserve 80 000 Retained earnings 40 000 A comparison of the carrying amounts and fair values of Rat Ltd’s assets at the acquisition date showed the following. Carrying amount Fair value Land $184 000 $200 000 Plant (cost $150 000) 100 000 120 000 Inventories 65 000 90 000 Accounts receivable 40 000 35 000 Goodwill 4 000 — In relation to these assets, the following information is available. • The plant had a further 5‐year life but was sold on 1 January 2020. • All the inventories were sold by 30 June 2019. • All the accounts receivable were collected by 30 June 2019. Any valuation reserves arising on consolidation are transferred on realisation of the asset to retained earnings. Water Ltd uses the partial goodwill method. The following transactions occurred between 1 July 2018 and 30 June 2020. 2019 Jan. 1 Rat Ltd transferred $20 000 from general reserve to retained earnings. Feb. 11 Rat Ltd paid an $8000 dividend, half being from profits earned prior to 1 July 2018. March 21 Rat Ltd sold inventories to Water Ltd for $50 000 recording a before‐tax profit of $10 000. The tax rate is 30%. June 25 Rat Ltd declared a $15 000 dividend. 30 Rat Ltd recorded a profit of $130 000. One‐quarter of the inventories sold by Rat Ltd to Water Ltd on 21 March 2019 are still on hand with Water Ltd. Aug 14 The $15 000 dividend declared by Rat Ltd was paid. Sept. 21 The remaining inventories in Water Ltd sold to it by Rat Ltd were sold outside the group. 2020 Jan. 1 Rat Ltd paid a $16 000 dividend. June 30 Rat Ltd recorded a profit of $150 000. Required Prepare the consolidation worksheet entries for the preparation of consolidated financial statements by Water Ltd at 30 June 2020.