On 1 July 2021, Roye Ltd acquired 25% of the voting shares of Leon Ltd for $45,000, thereby gaining significant influence over the investee.

On 1 July 2021, Leon Ltd’s net assets were represented by:

Share capital $120,000

Retained Earnings $ 36,000

At the time of the share purchase, all assets and liabilities of Leon Ltd were recorded at fair value, except for inventory. The inventory was recorded at a book value which was $40,000 above its fair value. The inventory still remained on hand on 30 June 2023.

During the year ended 30 June 2022, the following occurred:

* Leon Ltd paid a dividend of $15,000.

* Leon Ltd recorded a net profit after tax of $72,000 for the year.

During the year ended 30 June 2023, the following occurred:

* Leon Ltd recorded a net loss after tax of $240,000 for the year.

* Leon Ltd made an upward revaluation of a building to its fair value, which resulted in an after-tax increase of $45,000 in Leon Ltd’s asset revaluation reserve.

During the year ended 30 June 2024, the following occurred:

* Leon Ltd recorded a net profit after tax of $90,000 for the year.

* Leon Ltd made a downward revaluation of its machinery to its fair value, which resulted in an after-tax decrease of $30,000 in Leon Ltd’s asset revaluation reserve.

The tax rate is 30%.

Required:

Part (A): Provide the acquisition analysis in relation to Roye Ltd’s investment in Leon Ltd (3 marks).

Assume that Roye Ltd prepares consolidated financial statements. Record all journal entries in the consolidation worksheet of Roye Ltd in relation to its investment in Leon Ltd during:

Part (B): the year ended 30 June 2022 

Part (C): the year ended 30 June 2023 and

Part (D): the year ended 30 June 2024 

Show all calculations.

Formatting requirements: In all journal entries, you must specify whether the entry is a debit or credit entry by including “Dr” or “Cr” before the account name. Credit entries must also be indented. Journal entries which do not follow these requirements will be awarded a mark of zero. Below are examples of correctly formatted journal entries:

Dr Cash 1000

Cr Cash 1000