The following is the extracted financial records from Excel Ltd and its subsidiary Right Ltd at 3...

The following is the extracted financial records from Excel Ltd and its subsidiary Right Ltd at 30 June 2019.

	Excel Ltd (000)	Right Ltd (000)
Reconciliation of opening and closing retained earnings
Sales revenue	1342.8	1080
less Cost of goods sold	-928	-476
Gross Profit	414.8	604
Dividends received from Right	186
Management revenue	53
Gain on sale of plant	80	70
administrative expenses	-61.6	-77.4
Depreciation	-59	-113.6
Management fee expense		-53
Other Expenses	-202.2	-144
Profit before tax	411	286
Tax expense	123	84.4
Profit after tax	288	201.6
Retained earnings30 June 2018	638.8	478.4
	926.8	680
Dividends paid	-274.8	-186
Retained earnings30 June 2019	652	494
Statement of financial position
Shareholders equity
Retained earnings	652	494
Share capital	700	400

Current liabilities
Accounts payable	109.4	92.6
Tax payable	82.6	50
Non-current liabilities
Loans	347	232
	1891	1268.8
Current assets
Accounts receivable	118.8	124.6
Inventory	184	58
Non-current assets
Land	448	652
Plant at cost	599.7	711.6
Accumulated depreciation	-171.5	-277.6
Investment in Right Ltd	712
	1891	1268.6

Other Additional Information:

• Excel Ltd acquired its 100 per cent interest in Right Ltd on 1 July 2014, that is, five years earlier. At that date the capital and reserves of Right Ltd were:

Share capital	$400 000
Retained earnings	$360 000
	$760 000

• At the date of acquisition all assets were considered to be fairly valued.
• During the year Excel Ltd made total sales to Right Ltd of $120 000, while Right Ltd sold $100 000 in inventory to Excel Ltd.
• The opening inventory in Excel Ltd as at 1 July 2018 included inventory acquired from Right Ltd for $80 000 that cost Right Ltd $60 000 to produce.
• The closing inventory in Excel Ltd includes inventory acquired from Right Ltd at a cost of $66 000. This cost Right Ltd $56 000 to produce.
• The closing inventory of Right Ltd includes inventory acquired from Excel Ltd at a cost of $24 000. This cost Excel Ltd $20 000 to produce.

• On 1 July 2018 Right Ltd sold an item of plant to Excel Ltd for $232 000 when its carrying value in Right Ltds accounts was $162 000 (cost $270 000, accumulated depreciation $108 000). This plant is assessed as having a remaining useful life of six years. The Group has a policy of measuring its property, plant and equipment using the cost model.
• Right Ltd paid $53 000 in management fees to Excel Ltd.
• The tax rate is 30 per cent.

Required:

1. Prepare consolidated journal entries for the above information as at 30 June 2019. [10 Marks]
2. Prepare a consolidated statement of comprehensive income, a consolidated statement of changes in equity and a consolidated Statement of financial position for Excel Ltd and Right Ltd as at 30th June 2019. You also need to provide the consolidated work sheet. [10+10+5+5=30 Marks]
3. With reference to Excel Ltd's acquisition of Right Ltd. Comment on the appropriateness of the acquisitions as a business strategy on the firm's expansion. [10 marks]