Hi,

I am studying and I am not sure if I got the right answers for the exercise that I did. Can you please help me?

Topic is Consolidation.

On the 1st of January 2017 Armando Ltd purchased all the share capital of Rachel Ltd for $300,000.

Rachel's equity as at 1 Jan 2017 was:

Share Capital $200,000

Retained Earnings $ 50,000

General Reserves $ 20,000

Take into account:

• At this date all identifiable liabilities & assets of Rachel Ltd were recorder at Fair Value.
• Tax rate 30%
• The following transaction took place during the periods ended 30 June 2018 & 30 June 2020.

Transactions

1. On January 2018, Rebecca Ltd sold a new tractor to Armando Ltd for $ 20,000. This had a carrying amount of $16,000 at Rachel Ltd on that day. The accumulated depreciation was $5,000. Both entities charged depreciation assuming 10 years of remaining useful life. The tractor was still on hands with Armando Ltd at 30 June 2019.
2. Armando Ltd provided management services to Rachel Ltd during the period ended 30 June 2020. The total charge for those services was $3,000 that was unpaid at 30 June 2020.
3. In December 2019, Rachel Ltd paid a $1,500 interim dividend.
4. During March 2020, Rachel declared a $3,000 dividend. The dividend was paid in April 2020.
5. The directors of Armando Ltd believe that at 30 June 2019 goodwill was impaired by $10,000.

I need to do the adjusting journals entries for the consolidation, at 30 June 2019 & 30 June 2020.

Thank you in advance.