an ongoing lawsuit filed by a former client, seeking compensation of $40,000. It was estimated that there was a 25% chance that Trinity Ltd would lose the lawsuit and be obliged to pay the compensation. The lawsuit had not been recorded by Trinity Ltd. During the year ended 30 June 2022, the following occurred: (a) The undervalued land was sold to an external party during the year. (b) The undervalued equipment remained on hand by the end of the year. (c) The lawsuit remained ongoing by the end of the year. Assume that there were no other movements of pre-acquisition equity of Trinity Ltd apart from those detailed in the facts above. The corporate tax rate is 30%. Required: Part (A): Explain the purpose of the consolidation worksheet entries, specifically, why business combination valuation entries and pre-acquisition elimination entries need to be recorded (3 marks). Part (B): Complete the acquisition analysis for the Neo Ltd Group (4 marks). Part (C): Provide the consolidation adjustment entries for the Neo Ltd Group on 30 June 2022 (23 marks). There is no worksheet provided in this question and therefore you are not required to post the entries to a worksheet. When making adjustments to the relevant accounts, you can assume that each account that you need to adjust exists in the worksheet. Show all calculations. Formatting requirements: In all journal entries, you must specify whether the entry is a debitor credit entry by including "Dr" or "Cr" before the account name. Credit entries must also be indented. Journal an ongoing lawsuit filed by a former client, seeking compensation of $40,000. It was estimated that there was a 25% chance that Trinity Ltd would lose the lawsuit and be obliged to pay the compensation. The lawsuit had not been recorded by Trinity Ltd. During the year ended 30 June 2022, the following occurred: (a) The undervalued land was sold to an external party during the year. (b) The undervalued equipment remained on hand by the end of the year. (c) The lawsuit remained ongoing by the end of the year. Assume that there were no other movements of pre-acquisition equity of Trinity Ltd apart from those detailed in the facts above. The corporate tax rate is 30%. Required: Part (A): Explain the purpose of the consolidation worksheet entries, specifically, why business combination valuation entries and pre-acquisition elimination entries need to be recorded (3 marks). Part (B): Complete the acquisition analysis for the Neo Ltd Group (4 marks). Part (C): Provide the consolidation adjustment entries for the Neo Ltd Group on 30 June 2022 (23 marks). There is no worksheet provided in this question and therefore you are not required to post the entries to a worksheet. When making adjustments to the relevant accounts, you can assume that each account that you need to adjust exists in the worksheet. Show all calculations. Formatting requirements: In all journal entries, you must specify whether the entry is a debitor credit entry by including "Dr" or "Cr" before the account name. Credit entries must also be indented. Journal
