QUESTIONS 8: ACCOUNTING FOR INVESTMENT IN ASSOCIATE

SYDNEY Ltd acquired a 40% interest in PERTH Ltd for $ 100,000 on 1 July 2020. The equity of PERTH Ltd at the acquisition date was:

Share capital $ 200,000

Retained earnings $ 50,000

$ 250,000

All the identifiable assets and liabilities of PERTH Ltd. were recorded at fair value. Profits and dividends for the years ended 30 June 2021 to 2022 were as follows:

Year	Profit for the year $	Dividends paid $
2021	80,000	30,000
2022	40,000	10,000

Required:

Prepare the consolidation worksheet entries to account for SYDNEY Ltds interest in the associated, PERTH Ltd. for final year ended 30 June 2021 and 2022. (Notes: SYDNEY Ltd is a parent company.).