SAQA LTD Acquired 100% of the shares of Walu ltd on 1 july 2017 for $600000, when the equity of walu ltd consisted of:

• share capital $450000
• General Reserve $70000
• Retained earnings $45000
• Asset revaluation reserve $10800

all indentifiable assets and liabilities of walu ltd are recorded at fair value at this date except for inventories for which the fair value was $10000 greater than carying amount and plant which had a carrying amount of $150000(net of $40000 accumulated depreciation) and a fair value of $170000. the inventories were all sold by 30 june 2018, and the plant had a further 5 year life with depreciation based on the straight line method.

financial information for both companies at 30 june 2020 as follows:

saqa Ltd Walu Ltd

sales revenue 720000 530000

other revenue 240000 120000

960000 650000

cost of sales (610000) (410000)

other expense (230000) (160000)

(840000) (570000)

profit before tax )80000

tax expense (40000) (25000)

profit for the period 80000 55000

retained earnings at 1/7/19 200000 112000

280000 167000

dividend paid (20000) (10000)

Dividend Declared (25000) (15000)

(45000) (25000)

retained earnings @ 30/6/20 235000 142000

share capital 600000 500000

asset revaluation surplus * 20000 60000

general reserve 80000 100000

total equity 935000 802000

dividend payable 25000 15000

other liabilities 25000 25000

total liabilities 50000 40000

total equity and liabilities 985000 842000

receivables 40000 30000

inventory 100000 170000

plant and equipment 200000 500000

accumulated depreciation (115000) (88000)

land at fair value 80000 80000

shares in Walu ltd 600000 -

deferred tax assets 50000 40000

other assets 30000 110000

total assets 985000 842000

THE BALANCES OF THE SURPLUS AT 1 JULY 2019 WERE $35000(SAQA LTD) and $50000 (walu ltd)

the following transactions took place between saqa ltd and walu ltd:

a.) during the 2019-20 period, walu ltd sold inventory to saqa ltd for $23000 recording a profit before tax of $3000. Sala Ltd has since resold half of these items.

b) during the 2019-20 period, saqa ltd sold inventory to walu ltd for $18000, recording a profit before tax of $2000. walu ltd has not resold any of these items.

c)on 1 june 2020, walu ltd paid $1000 to saqa ltd for services rendered.

d) during the 2018-19 period, walu ltd sold inventory to saqa ltd. At 30 june 2019, saqa ltd still had inventory on hand on which walu ltd had recorded a before tax profit of $4000.

e) on 1 july 2018, walu ltd sold plant to saqa ltd for $150000, recording a profit of $20000 before tax. saqa ltd applies a 10% p.a. straight line method of depreciation in relation to assets.

required:

prepare a consolidation worksheet entries for saqa ltd for the year ended 30 june 2020. Assume an income tax rate of 30%.