Part A

On 1 July 2018, Kiwi Ltd purchased 40% of the shares of Fruit Ltd at a cost of $240,000. Kiwi Ltd does not control Fruit Ltd but does have significant influence. The carrying amounts of Fruit Ltd's net assets (at fair value) at date of acquisition were as follows:

Equity

1/7/2018

Share capital 430,000

Asset Revaluation Surplus 20,000

Retained earnings 110,000

The following information relates to Fruit Ltd for 30/6/19 and 30/6/20:

30/6/19 30/6/20

Profit/loss after tax 260,000 140,000

Dividend paid - 50,000

Asset Revaluation Surplus 20,000 24,000

Required

Prepare the journal entries required by Kiwi Ltd relating to its Investment in Fruit Ltd and subsequent transactions for the period from 1 July 2018 to 30 June 2020.Kiwi Ltd is not a parent entity.

Part B

Kiwi continues to hold a 40% shareholding in Fruit Ltd.

Profit after tax for Fruit Ltd in the year ended 30 June 2021 is $80,000.

In this year, Kiwi Ltd sold inventory to Fruit Ltd and recorded a profit before tax of $14,000.At 30 June 2021, the inventory is unsold by Fruit Ltd.

In addition, Fruit Ltd sold machinery to Kiwi Ltd for $25,000 on 1 July, 2020.The machinery cost Fruit Ltd $16,000.Kiwi applies 10% pa straight-line depreciation method.

There were no dividends paid and no asset revaluations in this year.

Required

Calculate Kiwi Ltd's share of profit for 30 June 2021.In addition, prepare the journal entries that would be required in the accounting records of Kiwi Ltd for the year ended 30 June 2021