Rip Ltd acquired all of the share capital in Curl Ltd. The following intra-group transactions are relevant
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Question:
Rip Ltd acquired all of the share capital in Curl Ltd. The following intra-group transactions are relevant to the consolidation for the year ended 30 June 2021:
- Rip Ltd provided management services to Curl Ltd for $40,000.
- Curl Ltd provided Rip Ltd with a loan of $100,000 on 1 July 2020.
Rip Ltd has paid interest of 10% during the year.
- During the year, Rip Ltd sold inventories to Curl Ltd for $500,000, which had originally cost Rip Ltd $420,000. On 30 June 2021, half of these inventories remained in Curl Ltd's books. At the year-end, Curl Ltd still owed Rip Ltd $100,000 for the purchase of inventories.
- Curl Ltd declared and paid $25,000 of dividends.
- Rip Ltd acquired a piece of land from Curl Ltd for $800,000 cash. Before the transfer, the land value in the accounting records of Curl Ltd was $600,000.
Assume the company tax rate is 30%.
Required:
Prepare the necessary consolidation journal entries for Rip Ltd group for the year ended 30 June 2021 regarding these intra-group transactions and balances.
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