Question
Senior Ltd owns 100% of the issued shares of Junior Ltd. The following financial position of Senior ltd and its subsidiary Junior ltd have been
Senior Ltd owns 100% of the issued shares of Junior Ltd. The following financial position of Senior ltd and its subsidiary Junior ltd have been extracted at 30 June 2016:
Senior Ltd
($ million)
Junior Ltd
($ million)
Shareholders equity
Retained earnings
152.8
115.78
Share capital
164.06
93.75
Current liabilities
Accounts payable
-
21.7
Tax payable
37.5
11.72
Non-current liabilities
Loans
88.5
54.38
442.86
297.33
Current assets
Accounts receivable
27.84
29.2
Inventory
43.02
13.59
Non-current assets
Land and buildings
74.5
152.8
Plant at cost
150
166.78
Accumulated depreciation
(40)
(65.04)
Investment in Junior Ltd
187.5
442.86
297.33
On 1 July 2015, Senior Ltd sold an item of plant to Junior Ltd for 1.35 million. This plant carrying value in Senior Ltds accounts was $1.0125 million (cost $1.6875 million and accumulated depreciation $0.675 million). The remaining useful life of the plant is assessed as 12 years and the tax rate is 33%.
Required:
Provide the consolidation journal entries for 30 June 2016 and 30 June 2017 to adjust for the above sale.
Senior Ltd owns 100% of the issued shares of Junior Ltd. The following financial position of Senior ltd and its subsidiary Junior ltd have been extracted at 30 June 2016:
| Senior Ltd ($ million) | Junior Ltd ($ million) |
Shareholders equity |
|
|
Retained earnings | 152.8 | 115.78 |
Share capital | 164.06 | 93.75 |
Current liabilities |
|
|
Accounts payable | - | 21.7 |
Tax payable | 37.5 | 11.72 |
Non-current liabilities |
|
|
Loans | 88.5 | 54.38 |
| 442.86 | 297.33 |
Current assets |
|
|
Accounts receivable | 27.84 | 29.2 |
Inventory | 43.02 | 13.59 |
Non-current assets |
|
|
Land and buildings | 74.5 | 152.8 |
Plant at cost | 150 | 166.78 |
Accumulated depreciation | (40) | (65.04) |
Investment in Junior Ltd | 187.5 | |
| 442.86 | 297.33 |
On 1 July 2015, Senior Ltd sold an item of plant to Junior Ltd for 1.35 million. This plant carrying value in Senior Ltds accounts was $1.0125 million (cost $1.6875 million and accumulated depreciation $0.675 million). The remaining useful life of the plant is assessed as 12 years and the tax rate is 33%.
Required:
Provide the consolidation journal entries for 30 June 2016 and 30 June 2017 to adjust for the above sale.
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