QUESTION 3

Ho Ltd acquired 80% of the issued capital of Chi Ltd on 1 July 2016. The following three transactions occurred.

1)On 1 July 2018, Ho Ltd purchased equipment from Chi Ltd for $1,500,000. The equipment had originally cost Chi Ltd $1,200,000 when acquired on 1 July 2016. Chi Ltd had been depreciating the equipment over 12 years using the straight-line method. Ho Ltd expected the remaining useful life of the equipment to be 10 years and also depreciates using the straight-line method.

2)In May 2020, Ho Ltd sold inventory costing $80,000 to Chi Ltd for $150,000. One quarter of this inventory remained on hand as at 30 June 2020.

3)Chi Ltd paid a final dividend of $500,000 on 30 June 2020.

Required

Based on the information provided, prepare the intra-group journal entries in the space below, including all related tax effects, required upon consolidation as at 30 June 2020. The tax rate is 30%. Note: NCI allocation journals are not required.