Can someone explain to me how do i do with part c. There is the solution, the numbers is blank in the question. This is the official solution
ACCT 20002 INTERMEDIATE FINANCIAL ACCOUNTING TUTORIAL 8 SOLUTION On 1 July 2011, Parent Ltd acquired all of the shares of Sub Ltd for $200 000. At the acquisition date the equity of Sub Ltd consisted of: Share capital $100 000 Reserves 20 000 Retained earnings 45 000 At the date of acquisition this equity reflected the fair values of all the identifiable assets and liabilities of Sub Ltd. During the year ended 30 June 2015 inventory was sold for a profit of $1 000 by Sub Ltd to Parent Ltd. This inventory had cost Sub Ltd $2 000 and at the reporting date Parent Ltd had 40% of this inventory on hand. During the year ended 30 June 2016 inventory was sold for a profit of $1 500 by Sub Ltd to Parent Ltd. This inventory had cost Sub Ltd $3 500 and at the reporting date Parent Ltd had 213 of this inventory on hand. Parent Ltd sold the intragroup inventory purchased during the previous period to entities outside of the group. On 1 January 2013 Sub Ltd sold plant & equipment to Parent Ltd at which time Sub Ltd recorded a profit on sale of $60000. Parent Ltd has since depreciated the plant & equipment on a straight-line basis at 5% pa. On 30 June 2016 the directors of Parent valued goodwill at $30 000 having previously recognised impairments of $3 000. The corporate tax rate is 30%. Required: (a) Prepare the 30 June 2016 consolidation journal entries relevant to the above transactions and events. (b) Complete the consolidation worksheet extract provided. Parent Ltd sold the intragroup inventory purchased during FY13 to entities outside of the group at a mark-up of 100%. Required: (0) Complete the tables provided showing the differences between how this inventory would be recognised by the individual entities compared with the group across the FY13 and FY14 reporting periods. (a) CONSOLIDATION JOURNAL ENTRIES 1. Pre-acqu isition elimination Share capital 100 000 Reserves 20 000 Retained earnings 45 000 Goodwill 35 000 Shares in Sub Ltd Unrealised profit in opening inventory Opening retained earnings 280 Income tax expense 120 Cost of goods sold 200 000 400 lntragroup sale of inventory and unrealised profit in closing inventory Sales revenue 5 000 Cost of goods sold Inventory Deferred tax asset 300 Income tax expense lntragroup sale of depreciable asset from a prior period Opening retained earnings 60 000 Plant & equipment Deferred tax asset 18 000 Opening retained earnings Excess depreciation Accumulated depreciation 10 500 Opening retained earnings Depreciation Opening retained earnings 2 250 Income tax expense 900 Deferred tax asset Goodwill impairment Goodwill impairment expense 2 000 Opening retained profits 3 000 Accumulated impairment of goodwill 4 000 'I 000 300 60 000 18 000 7 500 3 000 3150 5 000 (b) Consolidation Worksheet (extract) as at 30 June 2016 INCOME STATEMENT Sales revenue 100 000 60 000 Cost of goods sold (62 000) (39 000) Gross prot 38 000 21 000 Goodwill impairment BALANCE SHEET 111v entory Goodwill Accumulated impairment Carrying amount (c) Parent Ltd sold the intragroup inventory purchased during FY13 to entities outside of the group at a mark-up of 100%. Entity perspectives FY13 reporting period mm Entity perspectives FY14 reporting period m
