Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Large Ltd owns 100% of the shares of Small Ltd. These shares were acquired on 1 July 2019 for $1 million when the shareholders funds

Large Ltd owns 100% of the shares of Small Ltd. These shares were acquired on 1 July 2019 for $1 million when the shareholders funds of Small Ltd were:

Share capital $500,000

Retained earnings $400,000

$900,000

All assets of Small Ltd were fairly stated at acquisition date, except for a land that had a fair value $50000 more than carrying value.

During the 2019/2020 financial year, Small Ltd sold inventory to Large Ltd at a sales price of $200,000. The inventory cost Small Ltd $120,000 to produce. At 30 June 2020 half of the stock was still on hand with Large Ltd. In addition, Small Ltd paid an interim dividend of $40,000 out of post-acquisition profits to Large Ltd during the 2019/2020 financial year. The tax rate is 30%.

Based on the above information, prepare the consolidation journal entries that Large Ltd will need to pass on 30 June 2020.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cloud Security Auditing

Authors: Suryadipta Majumdar, Taous Madi, Yushun Wang, Azadeh Tabiban, Momen Oqaily, Amir Alimohammadifar, Yosr Jarraya, Makan Pourzandi, Lingyu Wang, Mourad Debbabi

1st Edition

3030231305, 978-3030231309

More Books

Students also viewed these Accounting questions

Question

Defi ne business and identify potential risks and rewards.

Answered: 1 week ago