Type or paste question her Red Ltd, a parent entity, acquired a voting interest of 30 in Blue Ltd on 1 July 2017 for a cash consideration of $3,300,000 The acquisition gave Red Ltd significant influence over Blue Ltds operations Blue Ltds shareholders equity items at the time of acquisition were as follows $000 Issued capital 3,300 Retained earnings 1,518 Total equity 4,818 Additional Information On 1 July 2017, the carrying value of Blue Ltds plant and equipment was $2,475,000 while the fair value was $3,300,000 and the remaining useful life for assets in this class of assets was five years At the date of acquisition, all other assets and assumed liabilities were recognised at their fair value in Blue Ltds financial statements Blue Ltd and Red Ltd use straight line depreciation for plant and equipment Blue Ltd proposed and paid a dividend of $165,000 on 30 June 2019 Blue Ltd did not record a profit or loss from discontinuing operations in either 2018 or 2019 For the year ended 30 June 2018, Blue Ltd recorded an after tax profit of $742,500, out of which dividends of $247,500 were proposed and paid on 30 June 2018 For the year ended 30 June 2019, Blue Ltd recorded a profit after income tax of $528,000 During the year ended 30 June 2019, the following inter entity inventory transactions occurred Blue Ltd sold inventory to Red Ltd The inventory cost Blue Ltd $66,000 and was sold to Red Ltd for $99,000 50 of this inventory was still on hand in Red Ltds closing inventory at 30 June 2019 Red Ltd sold inventory to Blue Ltd The inventory cost Red Ltd $99,000 and was sold to Blue Ltd for $148,500 20 of this inventory was still on hand in Blue Ltds closing inventory at 30 June 2019 Red Ltd recognises dividends from associates as revenue when they are declared On 30 June 2018, Blue Ltd revalued its land upwards by $330,000 The amount taken to revaluation surplus was $231,000 No further revaluations of land have taken place in year ended 30 June 2019 Red Ltd has elected to use the cost method to measure investments in associates and joint ventures in its separate financial statements Red Ltd applies the equity method of accounting for its associates in its consolidated financial statements Red Ltds investment in Blue Ltd is subject to an annual impairment test Impairment losses are not required to be recognised for each of the years ended 30 June 2018 and 2019 in Red Ltds separate financial statements or consolidated financial statements The tax rate is 30 for all accounting periods Required Prepare the equity adjusting entries in Red Ltds consolidated financial statements to apply the equity accounting method to its investment in Blue Ltd for the year ended 30 June 2019 in accordance with AASB 128 Show all narrations and workings

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Type or paste question her Red Ltd, a parent entity, acquired a voting interest of 30% in Blue Ltd on 1 July 2017 for a

Type or paste question her

Red Ltd, a parent entity, acquired a voting interest of 30% in Blue Ltd on 1 July 2017 for a cash consideration of $3,300,000. The acquisition gave Red Ltd significant influence over Blue Ltds operations. Blue Ltds shareholders equity items at the time of acquisition were as follows:

	$000
Issued capital	3,300
Retained earnings	1,518
Total equity	4,818

Additional Information:
1. On 1 July 2017, the carrying value of Blue Ltds plant and equipment was $2,475,000 while the fair value was $3,300,000 and the remaining useful life for assets in this class of assets was five years. At the date of acquisition, all other assets and assumed liabilities were recognised at their fair value in Blue Ltds financial statements. Blue Ltd and Red Ltd use straight-line depreciation for plant and equipment.
2. Blue Ltd proposed and paid a dividend of $165,000 on 30 June 2019.
3. Blue Ltd did not record a profit or loss from discontinuing operations in either 2018 or 2019.
4. For the year ended 30 June 2018, Blue Ltd recorded an after-tax profit of $742,500, out of which dividends of $247,500 were proposed and paid on 30 June 2018.
5. For the year ended 30 June 2019, Blue Ltd recorded a profit after income tax of $528,000.
6. During the year ended 30 June 2019, the following inter-entity inventory transactions occurred:
- Blue Ltd sold inventory to Red Ltd. The inventory cost Blue Ltd $66,000 and was sold to Red Ltd for $99,000; 50% of this inventory was still on hand in Red Ltds closing inventory at 30 June 2019.
- Red Ltd sold inventory to Blue Ltd. The inventory cost Red Ltd $99,000 and was sold to Blue Ltd for $148,500. 20% of this inventory was still on hand in Blue Ltds closing inventory at 30 June 2019.
1. Red Ltd recognises dividends from associates as revenue when they are declared.
2. On 30 June 2018, Blue Ltd revalued its land upwards by $330,000. The amount taken to revaluation surplus was $231,000. No further revaluations of land have taken place in year ended 30 June 2019.
3. Red Ltd has elected to use the cost method to measure investments in associates and joint ventures in its separate financial statements.
4. Red Ltd applies the equity method of accounting for its associates in its consolidated financial statements.
5. Red Ltds investment in Blue Ltd is subject to an annual impairment test. Impairment losses are not required to be recognised for each of the years ended 30 June 2018 and 2019 in Red Ltds separate financial statements or consolidated financial statements.
6. The tax rate is 30% for all accounting periods.

Required:

Prepare the equity adjusting entries in Red Ltds consolidated financial statements to apply the equity accounting method to its investment in Blue Ltd for the year ended 30 June 2019 in accordance with AASB 128. Show all narrations and workings.