Part A Wishart Ltd acquired all issued share capital of Wishart Hills Ltd on 1 July 2020 for a cash payment of $698,000. The share capital and reserves of Wishart Hills Ltd at the date of acquisition were: Share capital $300,000 Retained earnings $200,000 Revaluation surplus $48,000 All assets of Wishart Hills Ltd were fairly valued at the date of acquisition, except for an equipment that had a fair value $20,000 greater than its carrying amount. The cost of the equipment was $75,000 and it had accumulated depreciation of $25,000. At the date of acquisition, it was expected that the equipment had a remaining useful life of eight years. There were no transactions and dividend declared between Wishart Ltd and Wishart Hills Ltd from 1 July 2020 to 30 June 2022. No dividend declared by Wishart Ltd and Wishart Hills Ltd for year ended 30 June 2022. On 1 January 2023 Wishart Hills Ltd sold an item of plant to Wishart Ltd for $55,000 when its carrying value in Wishart Hillss books was $40,000 (original cost $90,000 and original estimated life of nine years). There were no other transactions between Wishart Ltd and Wishart Hills Ltd for year ended 30 June 2023. No dividend declared by Wishart Ltd and Wishart Hills Ltd for year ended 30 June 2023. 2 On 30 June 2025 Wishart Ltd sold a property to Wishart Hills Ltd for $400,000 when its carrying value, and original cost, in Wisharts books was $420,000 and estimated remaining useful life was twenty years. During financial year 2025, Wishart Ltd provided management consultation to Wishart Hills Ltd and this was the first time that Wishart Ltd provided such service to Wishart Hills Ltd. At the end of 2025, Wishart Hills Ltd paid $5,000 for these services and there is no payable for these services at year end. There were no other transactions between Wishart Ltd and Wishart Hills Ltd from 1 July 2023 to 30 June 2025. No dividend declared by Wishart Ltd and Wishart Hills Ltd for year ended 30 June 2024 and 2025. Wishart Ltd incurred the following transactions with Wishart Hills Ltd for year ended 30 June 2026: Wishart Ltd made sales of inventory to Wishart Hills Ltd of $200,000, while Wishart Hills Ltd sold $250,000 of inventory to Wishart Ltd. Closing inventories on 30 June 2026 included the following amounts: Wishart Ltd $90,000 (bought from Wishart Hills Ltd) and Wishart Hills Ltd $150,000 (bought from Wishart Ltd). Intragroup sales of inventory policy applied. The opening inventory in Wishart Ltd included stock acquired from Wishart Hills Ltd, which had originally cost Wishart Hills Ltd $140,000. The opening inventory of Wishart Hills Ltd included stock acquired from Wishart Ltd, which had originally cost Wishart Ltd $160,000. Intragroup sales of inventory policy applied. Wishart Ltd declared and paid dividend $75,000. Wishart Hills Ltd declared and paid dividend $50,000 on 30 June 2026. Wishart Hills Ltd has a number of long-term loans, including an interest free five-year loan for $50,000 from Wishart Ltd. This interest free five-year loan was effective from 1 July 2025. You were appointed as a financial accountant at Wishart Ltd and requested to prepare the followings: I. acquisition analysis and adjustment/elimination journal entries for consolidation at acquisition, 1 July 2020; II. adjustment/elimination journal entries for consolidation as at 30 June 2025, and III. adjustment/elimination journal entries for consolidation as at 30 June 2026. After meeting with your supervisor you gathered the following information which you might need to complete your work: Wishart Ltd has the following accounting policies for the economic entity: All property, plant and equipment are depreciated using the straight-line method with no residual value. For part-years, depreciation is to be calculated on the number of months the non-current asset is held in the relevant year. Revaluation adjustments on acquisition are to be made on consolidation only, not in the books of any subsidiary; Intragroup sales of inventory to be at a mark-up of 50% on cost. All calculated amounts are to be rounded to the nearest whole dollar. Companies in the group do not show cents in any journals, worksheets, or financial statements. 3 Management team of Wishart Ltd believes that goodwill acquired from business combination is impaired by $5,000 in the current financial year (1 July 2025 - 30 June 2026). There is no previous impairment of goodwill. The company tax rate is currently 30% and this rate has not changed for a number of years. Journal narrations are required. Number each year consolidation elimination/adjusting journal entries by 1, 2, 3, , etc;. Where more than one journal entry is needed for an event to be completely accounted for add the letters a,b,c,etc to them as necessary.

Part B The consolidated financial statements for year ending 30 June 2026 for the economic entity have been prepared on the basis of your journals from Part A (III). These statements have been presented to the Board of Directors. The Board noted that its subsidiary, Wishart Hills Ltd, generated a tax loss for tax purposes for financial year ending 2026. Some board members inquire if it is possible to use subsidiarys tax loss to offset parents taxable income. Is this feasible? What is your solution and recommendation for the Board? (250 words maximum) You may make reference to relevant paragraphs of Australian Accounting Standards and/or AASB Framework and to other sources of material.