Question 1.

B Ltd purchased an asset for $200 000 on 1 July 2015. This asset has a five year

life and is depreciated straight line for both accounting and taxation purposes. B

Ltd sold this asset to A Ltd on 1 Jul 2017 for $150 000. A Ltd owns 80% of the

share capital of B Ltd. For the year ended 30 June 2019, B Ltd made an after tax

profit of $500 000. The company tax rate is 30%.

Required:

Prepare the consolidation journal entries for 2018 and 2019 to adjust for this

asset sale, and calculate the NCI share of B Ltd as at 30 June 2019. Show your

workings.