Positive Ltd (Positive) acquired an 80% stake in Strong Ltd (Strong) on 1 January 20x1. The purchase consideration consisted of $2,600,000 cash paid immediately, 500,000 shares in Positive as well as $1,505,200 payable on 31 December 20x1 should Strong increase its sales by 40% in the year ending on the same day. It was estimated that there was a 50% possibility of Strong attaining the required level of sales. The relevant rate of return is 6% per annum. On the acquisition date, Strong had share capital and retained earnings of $2,500,000 and $1,200,000 respectively. Its net assets were carried at fair value in its financial statements except for the following: Building that had a carrying amount of $1,400,000 million was valued at $1,650,000. It had a remaining useful life of 10 years with no residual value. Strong has an internally generated brand name that had been valued at $750,000 by market experts and estimated to have a 15-year useful life. This had not been recorded in the companys financial statements. At the acquisition date, shares in Positive and Strong were trading at $1.80 and $1.30 per share respectively. Positive group adopts the proportionate share of the fair value of the subsidiaries net identifiable assets in measuring any non-controlling interest.

Positive extended a loan of $200,000 to Strong on 1 April 20x2 with an interest rate of 4% per annum. Interest for the year ended 31 December 20x2 had not been paid but were recorded in the books of both companies appropriately.

Required:

Prepare the consolidation journal entry for elimination of the investment account in Strong and for elimination of the inter-company loan for the financial year ended 31 December 20x2.