59 On 1 July 2018, Pipi Ltd acquired 60% of the issued shares of Gigi Ltd for...
Question:
59
On 1 July 2018, Pipi Ltd acquired 60% of the issued shares of Gigi Ltd for $136,000 when the shareholders' equity of Gigi Ltd was: $ Share capital 86,000 General reserve 10,000 Retained earnings 15,000 - At the date of acquisition, all identifiable net assets of Gigi Ltd were recorded at fair value. - A plant owned by Gigi Ltd with a carrying amount of $45,000 was sold to Pipi Ltd for $55,000 on 1 July 2018. Pipi Ltd applies a depreciation rate of 10% per annum from the date of transfer of the plant. - For the year ended 30 June 2020, the operating profit after tax of Gigi Ltd was $3 600. The tax rate is 30%. In preparing the consolidation financial statements for the year ended 30 June 2020, the adjusting entries to eliminate the intragroup sale of plant (ignoring any depreciation effect from the transaction) includes all of the following entries except for:
A debit to deferred tax asset of $3,000
A credit to plant of $10,000
A debit to retained earnings at 1 July 2019 of $7,000
A credit to NCI of $2,800