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On 1 January 20X5, Gold Ltd purchased all the shares in Silver Ltd for $475. The reporting period to 31 December 20X5 preceded the introduction

On 1 January 20X5, Gold Ltd purchased all the shares in Silver Ltd for $475. The reporting period to 31 December 20X5 preceded the introduction of AASB 127.38A. Financial statements for the companies Gold Ltd and Silver Ltd to 31 December 20X5 are as follows:

a) Required: Explain how Gold Ltd has accounted for the dividend from Silver, and why you agree or disagree with the accounting.

b) Prepare a consolidated worksheet and formal balance sheet and profit or loss statement for Gold Ltd and its subsidiary at 31 December 20X5.

c) Would you answer to (i) and/or (ii) differ if AASB 127.38A had been in operation? State any assumptions you make in giving your answer.

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