D. Prepare the consolidation worksheet journal entries to eliminate the effects of Inter-entity transactions as at 30 June 2017.

On 1 July 2013 David Ltd acquired all of the share capital of Goliath Limited for a consideration of $500,000 cash and a brand that was held in their accounts at a book value of $10,000 but at 1 July 2013 had a fair value of $24,000. At that date all the identifiable assets and liabilities were recorded at fair value with the exception of: ASSET Inventory Land Plant (less depn) Book Value Market Value 10,000 12,000 25,000 28,000 20,000 3,000 17,000 21,000 16,000 12,700 Acounts Receivable The inventory was all sold by 30/6/14. The remaining useful life of the plant is 5 years. The accounts receivable were collected by 30/6/14 for $12,700 The land was sold on 30/12/16 for $30000. The plant was on hand still at 30/6/17. At the date of acquisition the equity of Goliath Ltd consisted of: Share Capital General Reserve Retained Earnings 350,000 100,000 60,000 Information from the trial balances of David Ltd and Goliath Ltd at 30 June 2017 is presented overleaf. Additional Information 1. On 1 Jan 2017 Goliath Ltd sold inventory to David Ltd costing $40,000 for $50,000. Half of this inventory was sold to outside parties for $30,000 by 30/6/17. 2. On 1 Jan 2016 Goliath Ltd sold inventory costing $9000 to David Ltd for $12,000. David Ltd treats the item as equipment and depreciates it at 10% per annum. 3. On 1 July 2016 Goliath sold plant to David for $10,000. The plant had cost Goliath $10,000 on 1 July 2014 and it was being depreciated at 10% per annum. David regards the plant as inventory. The inventory was all sold by 30th July 2016. 4. At 1 July 2016 Goliath Ltd held inventory that it had purchased from David Ltd on 1 June 2016 at a profit of $8000. All inventory was sold by 30 June 2017. 5. David Ltd accrues dividends from Goliath Ltd once they are declared. 6. David Ltd has earned $1200 in interest revenue in the 2017 financial year from Goliath Ltd. 7. David Ltd has earned $4800 in service revenue in the 2017 financial year from Goliath Ltd. 8. Assume a tax rate of 30%. CR 668,200 Trial Balances As at 30 June 2017 Mario Ltd DR CR 1,250,000 945,500 61,000 5,200 3,500 7,000 4,000 Luigi Ltd DR D 393,500 50,500 6,500 2,400 1,200 11,000 2,400 1,200 11,500 12,600 5,000 7,000 97,120 85,000 100,820 71,780 10,000 12,000 6,000 5,500 Sales Revenue Cost of Sales Wages and Salaries Depreciation Expense Service Expense Interest Expense Other Expenses Gain on Sale of Non Current Assets Service Revenue Interest Revenue Dividend Revenue Income tax expense Retained Earnings 1/7/16 Dividend Paid Dividend Declared Share Capital General Reserve Other Equity 1/7/16 Gains on Financial Assets Loan Payable to Mario Ltd Deferred Tax Liability Dividend Payable Shares in Luigi Ltd Cash Inventories Other Current Assets Dividend Receivable Loan receivable from Luigi Ltd Financial Assets Plant and Equipment Acc. Depreciation Plant Land 1 500,000 135,000 4,000 1,000 340,000 76,000 12,000 6,000 9,000 30,000 5,500 67,000 18,000 110,000 69.480 300,000 500,000 125,100 168,000 11,000 5,500 9,000 15,000 52,000 68,000 45,000 10,000 31,000 70,000 2,100,920 120,000 1,274,080 2,100,920 1,274,080 On 1 July 2013 David Ltd acquired all of the share capital of Goliath Limited for a consideration of $500,000 cash and a brand that was held in their accounts at a book value of $10,000 but at 1 July 2013 had a fair value of $24,000. At that date all the identifiable assets and liabilities were recorded at fair value with the exception of: ASSET Inventory Land Plant (less depn) Book Value Market Value 10,000 12,000 25,000 28,000 20,000 3,000 17,000 21,000 16,000 12,700 Acounts Receivable The inventory was all sold by 30/6/14. The remaining useful life of the plant is 5 years. The accounts receivable were collected by 30/6/14 for $12,700 The land was sold on 30/12/16 for $30000. The plant was on hand still at 30/6/17. At the date of acquisition the equity of Goliath Ltd consisted of: Share Capital General Reserve Retained Earnings 350,000 100,000 60,000 Information from the trial balances of David Ltd and Goliath Ltd at 30 June 2017 is presented overleaf. Additional Information 1. On 1 Jan 2017 Goliath Ltd sold inventory to David Ltd costing $40,000 for $50,000. Half of this inventory was sold to outside parties for $30,000 by 30/6/17. 2. On 1 Jan 2016 Goliath Ltd sold inventory costing $9000 to David Ltd for $12,000. David Ltd treats the item as equipment and depreciates it at 10% per annum. 3. On 1 July 2016 Goliath sold plant to David for $10,000. The plant had cost Goliath $10,000 on 1 July 2014 and it was being depreciated at 10% per annum. David regards the plant as inventory. The inventory was all sold by 30th July 2016. 4. At 1 July 2016 Goliath Ltd held inventory that it had purchased from David Ltd on 1 June 2016 at a profit of $8000. All inventory was sold by 30 June 2017. 5. David Ltd accrues dividends from Goliath Ltd once they are declared. 6. David Ltd has earned $1200 in interest revenue in the 2017 financial year from Goliath Ltd. 7. David Ltd has earned $4800 in service revenue in the 2017 financial year from Goliath Ltd. 8. Assume a tax rate of 30%. CR 668,200 Trial Balances As at 30 June 2017 Mario Ltd DR CR 1,250,000 945,500 61,000 5,200 3,500 7,000 4,000 Luigi Ltd DR D 393,500 50,500 6,500 2,400 1,200 11,000 2,400 1,200 11,500 12,600 5,000 7,000 97,120 85,000 100,820 71,780 10,000 12,000 6,000 5,500 Sales Revenue Cost of Sales Wages and Salaries Depreciation Expense Service Expense Interest Expense Other Expenses Gain on Sale of Non Current Assets Service Revenue Interest Revenue Dividend Revenue Income tax expense Retained Earnings 1/7/16 Dividend Paid Dividend Declared Share Capital General Reserve Other Equity 1/7/16 Gains on Financial Assets Loan Payable to Mario Ltd Deferred Tax Liability Dividend Payable Shares in Luigi Ltd Cash Inventories Other Current Assets Dividend Receivable Loan receivable from Luigi Ltd Financial Assets Plant and Equipment Acc. Depreciation Plant Land 1 500,000 135,000 4,000 1,000 340,000 76,000 12,000 6,000 9,000 30,000 5,500 67,000 18,000 110,000 69.480 300,000 500,000 125,100 168,000 11,000 5,500 9,000 15,000 52,000 68,000 45,000 10,000 31,000 70,000 2,100,920 120,000 1,274,080 2,100,920 1,274,080