Question 3

MCO Ltd acquired 80% of the issued shares of PKP Ltd for $174,800 in 2018. MCO Ltd recorded a goodwill of $5,000 from the acquisition.

(a) At 30 June 2020, inventory of MCO Ltd included an item sold to it by PKP Ltd for a before-tax profit of $110. This item was found to be obsolete and written off in June 2021.

(b) During the 202021 year, PKP Ltd had sold inventory to MCO Ltd for $28,900. The mark-up on sales was 20% on cost. At 30 June 2021, MCO Ltd still had some of this inventory on hand, amounting to items acquired from PKP Ltd for $2,400.

(c) On 29 June 2021, PKP Ltd sold plant to MCO Ltd for a before-tax profit of $2,000. This plant was carried at $3,000 (original cost $20,000) in the records of PKP Ltd at time of sale.

(d) The goodwill arising from the acquisition was impaired by $200 in the year ending 30 June 2020.

(e) Financial information provided by PKP Ltd concerning events affecting it during the 202021 year was as follows:

Net Profit After Tax for the year	$27,500
Retained earnings at 1 July 2020	50,000
	77,500
Dividend paid	(10,000)
Dividend declared	(3,000)
Transfer to general reserve	(1,500)
	14,500
Retained earnings at 30 June 2021	$63,000

(f) MCO Ltd and PKP Ltd depreciate their items of property, Plant & Equipment using 20% p.a. straight-line method.

(g) Tax rate is 30%.

Required

Prepare the consolidation worksheet entries for the preparation of the consolidated financial statements of MCO Ltd at 30 June 2021 in accordance to IFRS 10/AASB 10 Consolidated