On l July 2018, Flying Ltd purchased 40% of the shares of Fox Ltd for $63 200. At that date, equity of Fox Ltd consisted of Share capital Retained earnings $125000 11000 At 1 July 2018, the identifiable assets and liabilities of Fox Ltd were recorded at fair value Information about income and changes in equity for both companies for the year ended 30 June 2021 was as follows. Flying Ltd $26 000 10 600 15 400 18000 33 400 5000 10000 15 000 $18400 Fox Ltd 23500 5400 18100 16000 34 100 4000 5000 9000 $25 100 Profit before tax Income tax expense Retained earnings (1/7/20) Dividend paid Retained earnings (30/6/21) Additional information Flying Ltd recognises dividends as revenue when they are declared by the investee On 31 December 2019, Fox Ltd sold Flying Ltd a motor vehicle for $12 000. The vehicle had originally cost Fox Ltd $18 000 and was written down to $9000 for both tax and accountin depreciated motor vehicles at the rate of 20% pa. on cost. The beginning inventories of Fox Ltd included goods at $4000 bought from Flying Ltd; their cost to Flying Ltd was $3200 g purposes at time of sale to Flying Ltd. Both companies The ending inventories of Flying Ltd included goods purchased from Fox Ltd at a profit before tax of $1600 The tax rate is 30%. Required: 1. Prepare the journal entries in the records of Flying Ltd to account for the investment in Fox Ltd under the equity method for the year ended 30 June 2021 assuming Flying Ltd does not prepare consolidated financial statements. 2. Prepare the consolidated worksheet entries in relation to the investment in Fox Ltd, assuming Flying Ltd does prepare consolidated financial statements at 30 June 2021