QUESTION 4+ On 1 July 2017, Quince Ltd acquired all of the share capital of Zara Ltd for $600,000. At this date, the equity of Zara Ltd consisted of 440,000 shares each fully paid to $1, and retained earnings of $40,000. All of the identifiable net assets of Zara Ltd were recorded at fair value except for the following assets:+ Carrying Fair value. amount+ S+ S+ Inventory+ 120,000+ 150.000.. Land 600.000+ 700.000. Machinery (cost $1,000,000)- 800,000+ 820,000-. The land was sold on 1 August 2019 for $940,000. Machinery had a further five-year life, with benefits expected to be received evenly over that time. Adjustments for differences between carrying amounts and fair values of assets at acquisition date are made on consolidation. By 31 December 2017 all inventory on hand at 1 July 2017 was sold. Zara Ltd has not recorded any goodwill at 1 July 2017. + Additional information:+ (a) Intragroup sales of inventory for the year ended 30 June 2020 from Quince Ltd to Zara Ltd were $14,000, all of which had been sold by Zara Ltd by year end. (b) Intragroup inventory on hand:+ (@) at 1 July 2019: held by Zara Ltd, purchased from Quince Ltd at a profit of $400.+ (ii) at 30 June 2020, held by Quince Ltd, purchased from Zara Ltd for $3,000 at a profit of $200.+ (c) Intragroup machinery on hand at 30 June 2020:4 Quince Ltd purchased from Zara Ltd on 1 January 2018 for $12,000 at a profit of $1 500 to Quince Ltd. Depreciation rate is 10% p.a. on cost.+ (d) The income tax rate is 30%.+ (e) Extracts from the financial statements of Quince Ltd and Zara Ltd at 30 June 2020 were as follows:+ Quince Ltd+ Zara Ltd. Retained earnings (1/7/19)- 225,000+ 231,000+.. Final dividend declared- (55,000)+ (45,000)-. Question 4 continued overleafRequired:+ On the following pages of this examination paper:+ (a) Prepare the consolidation worksheet general journal entries necessary for the preparation of the consolidated financial statements of Quince Ltd at 30 June 2020. (Note: The worksheet and consolidated financial statements do not have to be prepared). (b) Explain in detail how your answer to part (a) would change if Quince Ltd purchased 90% of the shares in Zara Ltd in 1 July 2017. Nb. Calculations not required; just explain the relevant changes in words