32% T2:53 518 BA- X = 5c 1773e6f7fb1e740432fc991c87a9c600.ppt 3 HM DHARTH B I UT AA1 Chapter 5 Problem 5.4 (Week 7 Apr 2 Class discussion) PS4 Intercompany transfer of fixed assets Parent Co purchased an equipment on 1 January 20x1 for $200,000 20X5 CJES The estimated useful life at that date was 10 years with a nil residual value. Downstream sale (P sold to S) On 1 July 2015, Parent sold the equipment to Subsidiary Co for CJEs in the year of transfer 20x5 $120,000. Parent Co had a 90%ownership interest in Subsidiary CJE2 re-instate original cost, acc. depreciation on equipment transferred and reverse UP On 1 July 20x5, the remaining economic useful life was re-estimated CJE3 tax effect on CJE2 (Cr PL Tax Exp $2,000) as 7 years. Net profit after tax of Subsidiary for 20x5 was $500,000 CJE4 adj 20x5 depreciation (Cr PL Dep exp S714) CJE5 tax effect on CJE4 (Dr PL Tax exp) Assume a tax rate 20% CJE6 Allocation of 20x5 S's NPAT to NCI Required: Upstream sale (S sold to P) 1. Show the consolidated journal entries for 20x5 relating to the above CJE2 to CJES same as above CJE6 Allocation of 20x5 S's Adjusted NPAT transaction. (5492,571) to NCI 2 If the situation had been reversed in that it was Subsidiary that sold the equipment to Parent, show the consolidated journal entries for 20x8. 5