Part A [10 marks] On 1 January 2023, Suva Ltd acquired all the issued shares (cum div.) of Lautoka Ltd for $263000. At that date the equity of Lautoka Ltd was recorded as: Share capital $ 150000 Reserves 40000 Retained earnings 60000 On 1 January 2023, the records of Lautoka Ltd also showed that the company had recorded the asset goodwill at cost of $5000. Further, Lautoka Ltd had a dividend payable liability of $10000, the dividend to be paid in March 2023. All other assets and liabilities were carried at amounts equal to their fair values.

Required: Prepare the consolidation worksheet entries on 1 January 2023, immediately after combination.

Part B [15 marks] Yadra Ltd owns all of the share capital of Viti Ltd. In relation to the following intragroup transactions, all parts of which are independent unless specified, prepare the consolidation worksheet adjusting entries for preparation of the consolidated financial statements as at 30 June 2016. Assume an income tax rate of 30%.

(a) During the year ending 30 June 2016, Viti Ltd sold $55 000 worth of inventory to Yadra Ltd. Viti Ltd recorded an $8000 profit before tax on these transactions. At 30 June 2016, Yadra Ltd has one-quarter of these goods still on hand.

(b) Yadra Ltd manufactures items of machinery which are used as property, plant and equipment by other companies, including Viti Ltd. On 1 January 2016, Yadra Ltd sold such an item to Viti Ltd for $52 000, its cost to Yadra Ltd being only $45 000 to manufacture. Viti Ltd charges depreciation on these machines at 20% p.a. on the diminishing balance.

(c) A non-current asset with a carrying amount of $1200 was sold by Viti Ltd to Yadra Ltd for $900 on 1 January 2016. Yadra Ltd intended to use this item as inventory, being a seller of second-hand goods. Both entities charged depreciation at the rate of 10% p.a. on the diminishing balance on non-current assets. The item was still on hand at 30 June 2016.

(d) Yadra Ltd issued 1000 10% debentures of $100 at nominal value on 1 October 2015. Viti Ltd acquired 300 of these. Interest is payable half-yearly on 31 March and 30 September. Accruals have been recognised in the legal entities accounts.

(e) On 25 June 2016, Yadra Ltd declared a dividend of $8000. On the same day, Viti Ltd declared a $4000 dividend