On $1$ January $2022,$ Kiama Ltd acquired all the share capital of Gerringong Ltd for $$300000.$ The equity of Gerringong Ltd at $1$

January $2022$ was as follows.

Share capital

Retained earnings

General reserve

At this date, all identifiable assets and liabilities of Gerringong Ltd were recorded at fair value.

On $1$ May $2025,$ Gerringong Ltd transferred $$15000$ from the general reserve $($pre$-$acquisition$)$ to retained earnings. The income

tax rate is $30\%.$

The following information has been provided about transactions between the two entities.

$($a$)$ The beginning and ending inventories of Kiama Ltd and Gerringong Ltd in relation to the current period ended on $31$

December $2025$ included the following inventories transferred intragroup.

Kiama Ltd sold inventories to Gerringong Ltd during the current period for $$3000.$ This was $$500$ above the cost of the

inventories to Kiama Ltd$.$ Gerringong Ltd sold inventories to Kiama Ltd in the current period for $$2500,$ recording a pre$-$tax

profit of $$800.$

$($b$)$ Kiama Ltd sold an inventories item to Gerringong Ltd on $1$ July $2025$ for use as machinery. The item cost Kiama Ltd $$4000$

and was sold to Gerringong Ltd for $$6000.$ Gerringong Ltd depreciated the item at a rate of $10\%$ p$.$a$.$ on cost$.$

$($c$)$ On $31$ December $2025,$ Gerringong Ltd owes Kiama Ltd $$1000$ for items sold on credit.

$($d$)$ Gerringong Ltd undertook an advertising campaign for Kiama Ltd during the period ended $31$ December $2025.$ Kiama Ltd

was charged and paid $$8000$ to Gerringong Ltd for this service.

$($e$)$ Kiama Ltd received dividends totalling $$63000$ during the current period ended $31$ December $2025$ from Gerringong Ltd$.$

These dividends were declared in the current period out of post$-$acquisition profits.

Required

Prepare the business combination valuationsontries$-$and pre$-$acquisition entries$-$at $31$ December $2025.$

Prepare the consolidation worksheet journal entries to eliminate the effects of intragroup transactions at $31$ December