Q2 Steam Ltd acquired its 80% interest in Train Ltd on 30 June 2017 for $410 000. At that date the capital and reserves of Train Ltd were: Share capital $250 000 Retained earnings $212 500 At the date of acquisition all assets were considered to be fairly valued. The management of Steam Ltd measures any non-controlling interest in Train Ltd at proportionate share of subsidiary's net identifiable assets. (a) Prepare an acquisition analysis at 30 June 2017, to determine goodwill or gain on bargain purchase at acquisition. (b) Train Ltd determines that goodwill at acquisition has been impaired by $1 000 annually. Prepare all consolidation/elimination journals at 30 June 2018. Narrations are required on all journals. c) For the financial year ending 30 June 2019, Steam Ltd had the following intragroup inventory transactions with Train Ltd: Steam Ltd sold inventory to Train Ltd for a price of $120,000. The inventory cost Steam Ltd $80,000 to produce. By 30 June 2019, Train Ltd had sold 15% of this inventory to external parties. i. ii. Why does this information create an elimination entry for consolidation purposes at year end? Assuming a tax rate of 30 per cent, prepare all consolidation/elimination journals related to these intragroup inventory transactions only for the year ending 30 June 2019. Narrations are required on all journals. Assuming a tax rate of 30 per cent and no further transaction, prepare all consolidation/elimination journals related to these intragroup inventory transactions only for the year ending 30 June 2020. Narrations are required on all journals. iii. Q2 Steam Ltd acquired its 80% interest in Train Ltd on 30 June 2017 for $410 000. At that date the capital and reserves of Train Ltd were: Share capital $250 000 Retained earnings $212 500 At the date of acquisition all assets were considered to be fairly valued. The management of Steam Ltd measures any non-controlling interest in Train Ltd at proportionate share of subsidiary's net identifiable assets. (a) Prepare an acquisition analysis at 30 June 2017, to determine goodwill or gain on bargain purchase at acquisition. (b) Train Ltd determines that goodwill at acquisition has been impaired by $1 000 annually. Prepare all consolidation/elimination journals at 30 June 2018. Narrations are required on all journals. c) For the financial year ending 30 June 2019, Steam Ltd had the following intragroup inventory transactions with Train Ltd: Steam Ltd sold inventory to Train Ltd for a price of $120,000. The inventory cost Steam Ltd $80,000 to produce. By 30 June 2019, Train Ltd had sold 15% of this inventory to external parties. i. ii. Why does this information create an elimination entry for consolidation purposes at year end? Assuming a tax rate of 30 per cent, prepare all consolidation/elimination journals related to these intragroup inventory transactions only for the year ending 30 June 2019. Narrations are required on all journals. Assuming a tax rate of 30 per cent and no further transaction, prepare all consolidation/elimination journals related to these intragroup inventory transactions only for the year ending 30 June 2020. Narrations are required on all journals
