1) Assume that on 01/10/2020, Parent Ltd purchased equipment for $90,000 from Sub Ltd. The equipment had originally been purchased by Sub Ltd on 01/01/2017 for $130,000. Both follow IRD rules for part year depreciation, and both calculate depreciation annually (i.e. once a year). Both depreciate equipment at 20% diminishing value, with no residual value. What would be the consolidation journal entry to adjust the 2020 depreciation? Assume balance date is 31/12.

a) Dr Depreciation Expense 6,000	Cr Accumulated Depreciation 6,000
b) Dr Depreciation Expense 4,688	Cr Accumulated Depreciation 4,688
c) Dr Depreciation Expense 8,812	Cr Accumulated Depreciation 8,812
d) Dr Depreciation Expense 8,000	Cr Accumulated Depreciation 8,000

2) Choose the incorrect statement in regard to NZ IAS 1 and the disclosure requirements for company share capital and reserves

1. The rights, preferences and restrictions on various classes of shares should be disclosed
2. A company should disclose the number of shares issued, both fully paid and not fully paid
3. The statement of financial performance should disclose both capital and reserves
4. Equity capital and reserves should be disaggregated into various classes such as paid-in capital, share premiums and reserves

3) A consolidation tax expense adjustment entry is not necessary when

1. A consolidation journal entry increases a revenue and an expense by a different amount
2. A consolidation journal entry increases or decreases net profit
3. A consolidation journal entry increases or decreases a revenue only, or increases or decreases an expense only
4. A consolidation journal entry increases a revenue and an expense by the same amount

4) Which of the following is the appropriate journal entry to adjust tax when a consolidation adjustment entry reduces net profit?

1. Debit deferred tax asset (DTA) and Credit tax expense
2. Debit deferred tax equity (DTE) and Credit tax expense
3. Debit tax expense and Credit deferred tax equity (DTE)
4. Debit tax expense and Credit deferred tax asset (DTA)

5) During the year, a parent has sold $65,000 worth of goods to the subsidiary, which had cost the parent $30,000. At balance date, 40% of these goods were still in the subsidiary's inventory. Assuming a tax rate of 28%, the consolidation journal entry to adjust the tax expense would be?

1. Dr Tax Expense 3,920, Cr Deferred Tax Asset (DTA) 3,920
2. Dr Tax Expense 9,800, Cr Deferred Tax Asset (DTA) 9,800
3. Dr Deferred Tax Asset (DTA) 3,920, Cr Tax Expense 3,920
4. Dr Deferred Tax Asset (DTA) 9,800, Cr Tax Expense 9,800

6) Assume that on 01/10/2020, Jones Ltd purchased machinery from Ivor Ltd for $95,000. The machinery had originally been purchased by Ivor Ltd on 01/01/2016 for $140,000. Accumulated depreciation to 31/12/2019 for Ivor Ltd was $80,000. What would be the gain or loss on sale?

1. $45,000 loss on sale
2. $35,000 gain on sale
3. $45,000 gain on sale
4. $35,000 loss on sale