QUESTION 2

Parent Ltd acquired 56% of the equity in Sub Ltd on 1 April2003for $900 000.

Parent Ltd has requested your help in the preparation of their consolidated financial statements for the financial year ended 31 March2020and has provided you with the following information relating to the sale of inventories between the Parent Ltd and Sub Ltd:

During March2020Sub Ltd made sales to Parent Ltd of $ 13 500. The inventory sold cost Sub Ltd $12 000.At 31 March 2020, the inventory Parent Ltd had on hand included a third of this purchase from Sub Ltd.

During March2019Parent Ltd made sales to Sub Ltd of $2 900 and recognised a profit of $1 466.Sub Ltd sold this inventory on 4 April 2019.

Required:

Prepare the necessary notional journal entries at 31 March2020in accordance with

NZ IFRS 10 Consolidated Financial StatementsandNZ IFRS 3 Business Combinations.