Topic 6: Consolidations and Intragroup transactions SQ 6-4 1. Starling Ltd purchased 100% of the issued shares in City Ltd on 1 July 2013 for $140 000. City Ltd's assets were all recorded at fair value, except for land which was undervalued by $50,000. 2. On acquisition shareholders' funds of City Ltd were as follows: Share capital $100 000 Retained earnings/(loss) $86 000 S(14 000) 3. Directors determined that $3,500 be recognised annually for goodwill impairment loss. During the financial year ending 30 June 2016: 4. Intra-group sales were $70 000, of which the following amounts of unrealised profit were in inventory: at the beginning of the year $8,000; at the end of the year $16,000. 5. Starling Ltd provides management services to City Ltd. During the year ending 2016, City Ltd paid $4,300 for these services and has a balance of $6 000 for management fees payable at 30 June 2016. As at 30 June 2015, the management fee payable balance was $5 300. 6 Starling Ltd declared and paid dividends of S32 000. City Ltd declared and paid dividends of $12 000. Required: Prepare all consolidation/elimination journal entries for the year ending 30 June 2016 assuming a tax rate of 30%. Note: all workings must be shown and the journal presented in a professional manner. Journal numbering must match the transaction numbers given above for each event. If more than one journal entry is required for an event, then add a letter (starting at a) to the relevant number. For example, if more than one journal is required for event I (acquisition), number them as la, Ib, Ic, etc