For each of the following independent intra-group transaction scenarios, assume that the consolidation process is done on 31 December 2020.

Required:

1. Prepare the necessary consolidation journal entries in each scenario. Preston Ltd owns 80% share capital of Sutherland Ltd. The tax rate is 30%. (narrations are not required).

Scenario 3:

On 1 July 2018, Preston Ltd sold an item of machinery to Sutherland Ltd for $900,000. Preston Ltd originally purchased the machinery for $1,600,000 on 1 January 2016. The original estimated useful life was 5 years but at the time of the sale the remaining useful life was estimated to be 4 years by Sutherland Ltd. The expected residual value of the machinery is estimated to be $nil by Sutherland Ltd.

ANSWER HERE:

(4 marks)

Date	Account Name	Debit	Credit