Answered step by step
Verified Expert Solution
Question
1 Approved Answer
how do I know the investment in Potoroo Ltd is 6000? where do $10000 + $20000 come from? Dibbler Ltd acquired 20% of the ordinary
how do I know the investment in Potoroo Ltd is 6000? where do $10000 + $20000 come from?
Dibbler Ltd acquired 20% of the ordinary shares of Potoroo Ltd on 1 July 2019. At this date, all the identifiable assets and liabilities of Potoroo Ltd were recorded at fair value. An analysis of the acquisition showed that S2000 of goodwill was acquired. Dibbler Ltd has no subsidiaries, and records its investment in the associate, Potoroo Ltd, in accordance with AASB 128. In the 2020-21 period, Potoroo Ltd recorded a profit of S100 000, paid an interim dividend of S10 000 and, in June 2021, declared a further dividend of $15 000. In June 2020, Potoroo Ltd had declared a $20 000 dividend, which was paid in August 2020. Dibbler Ltd recognises dividends as reeve The following transactions have occurred between the two entities (all transactions are independent unless specified). In January 2021, Potoroo Ltd sold inventories to Dibbler Ltd for S15 000. These inventories had previously cost Potoroo Ltd S10 000, and remains unsold by Dibbler Ltd at the end of the period. February 2021, Dibbler Ltd sold inventories to Potoroo Ltd at a before-tax profit of $5000. Half of this was sold by Potoroo Ltd before 30 June 2021. In June 2020, Potoroo Ltd sold inventories to Dibbler Ltd for $18 000. These inventories had cost Potoroo Ltd $12 000. At 30 June 2020, these inventories remained unsold by Dibbler Ltd. However, it was all sold by Dibbler Ltd before 30 June 2021. The tax rate is 30%. Required Prepare the journal entries in the records of Dibbler Ltd in relation to its investment in Potoroo Ltd for the year ended 30 June 2021. (LO6)Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started