Black Ltd paid $20,000 to acquire 100% of the issued shares of White Ltd at 1 July 2018 when the subsidiarys equity consisted of issued capital of $10,000 and retained earnings of $5,000. At the acquisition date, all assets and liabilities of White Ltd were recorded at their fair values, except for the following:

• - A piece of land with a carrying amount of $5,000 and a fair value of $6,000.
• - An item of plant with a book value of $1,200 and a fair value of $2,000. Its cost to White was 1,600. The plant has a remaining useful life of 4 years.
• - A contingent liability (it satisfied AASB 3 to be recognized on consolidation) with an estimated fair value of $500. This contingent liability had not been recognized by White Ltd at the date of acquisition.

Additional information:

• - The land was sold on 15 June 2020.
• - The contingent liability was settled on 1 September 2020 for $300.
• - Transaction 1: At 1 August 2018, Black sold inventory to White at a 25% mark-up. The inventory had originally cost Black $3,000. The inventory was all sold by 30 June 2019.
• - Transaction 2: At 1 September 2018, White sold inventory to Black at a 25% mark-up. The inventory had originally cost White $2,000. By 30 June 2019, Black held 30% of the inventory purchased from white. By 30 June 2020, Black still held 10% of the inventory purchased from White. The inventory was all sold by 30 June 2021.
• - Assume 30% tax rate and periodic inventory system

Required:

Based on the information provided, prepare the consolidation adjustment journals for the year ended 30 June 2020 (i.e. 2 years after the acquisition date). Provide narrations that include all relevant calculations.

Hint: Remember to systematically walk through all steps in the consolidation process.