D. Prepare the consolidation worksheet journal entries to eliminate the effects of inter-entity transactions as at 30 June 2017.

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On 1 July 2013 Douglas Ltd acquired all of the share capital (cum div)of Nanette Limited for a consideration of $500,000 cash and a brand that was held in their accounts at a book value of $10,000 but now had a fair value of $34,000. At the date of acquisition Nanette's accounts showed a dividend payable of $10,000. At that date all the identifiable assets and liabilities were recorded at fair value with the exception of: ASSET Inventory Land Plant (less depn) Acounts Receivable Book Value 10,000 25,000 20,000 3,000 17,000 16,000 Share Capital General Reserve Retained Earnings Market Value 14,000 30,000 The inventory was all sold by 30/6/14. The remaining useful life of the plant is 5 years. The accounts receivable were collected by 30/6/14 for $14,000 22,000 14,000 The land was sold on 30/12/16 for $32000. The plant was on hand still at 30/6/17. At the date of acquisition the equity of Nanette Ltd consisted of: 380,000 70,000 62,000 Information from the trial balances of Nanette Ltd and Douglas Ltd at 30 June 2017 is presented overleaf. Additional Information 1. On 1 Jan 2017 Douglas Ltd sold inventory to Nanette Ltd costing $60,000 for $80,000. Half of this inventory was sold to outside parties for $30,000 by 30/6/17. 2. On 1 Jan 2016 Nanette Ltd sold inventory costing $9000 to Douglas Ltd for $12,000. Douglas Ltd treats the item as equipment and depreciates it at 10% per annum. 3.On 1 July 2016 Nanette sold plant to Douglas for $12,000. The plant had cost Nanette $10,000 on 1 July 2014 and it was being depreciated at 10% per annum. Douglas regards the plant as inventory. The inventory was all sold by 30th July 2016. 4. At 1 July 2016 Douglas Ltd held inventory that it had purchased from Nanette Ltd on 1 June 2016 at a profit of $7000. All inventory was sold by 30 June 2017 5. Douglas Ltd accrues dividends from Nanette Ltd once they are declared. 6. Nanette Ltd has earned $1200 in interest revenue in the 2017 financial year from Douglas Ltd. 7. Nanette Ltd has earned $4800 in service revenue in the 2017 financial year from Douglas Ltd. 8. Assume a tax rate of 30%. On 1 July 2013 Douglas Ltd acquired all of the share capital (cum div)of Nanette Limited for a consideration of $500,000 cash and a brand that was held in their accounts at a book value of $10,000 but now had a fair value of $34,000. At the date of acquisition Nanette's accounts showed a dividend payable of $10,000. At that date all the identifiable assets and liabilities were recorded at fair value with the exception of: ASSET Inventory Land Plant (less depn) Acounts Receivable Book Value 10,000 25,000 20,000 3,000 17,000 16,000 Share Capital General Reserve Retained Earnings Market Value 14,000 30,000 The inventory was all sold by 30/6/14. The remaining useful life of the plant is 5 years. The accounts receivable were collected by 30/6/14 for $14,000 22,000 14,000 The land was sold on 30/12/16 for $32000. The plant was on hand still at 30/6/17. At the date of acquisition the equity of Nanette Ltd consisted of: 380,000 70,000 62,000 Information from the trial balances of Nanette Ltd and Douglas Ltd at 30 June 2017 is presented overleaf. Additional Information 1. On 1 Jan 2017 Douglas Ltd sold inventory to Nanette Ltd costing $60,000 for $80,000. Half of this inventory was sold to outside parties for $30,000 by 30/6/17. 2. On 1 Jan 2016 Nanette Ltd sold inventory costing $9000 to Douglas Ltd for $12,000. Douglas Ltd treats the item as equipment and depreciates it at 10% per annum. 3.On 1 July 2016 Nanette sold plant to Douglas for $12,000. The plant had cost Nanette $10,000 on 1 July 2014 and it was being depreciated at 10% per annum. Douglas regards the plant as inventory. The inventory was all sold by 30th July 2016. 4. At 1 July 2016 Douglas Ltd held inventory that it had purchased from Nanette Ltd on 1 June 2016 at a profit of $7000. All inventory was sold by 30 June 2017 5. Douglas Ltd accrues dividends from Nanette Ltd once they are declared. 6. Nanette Ltd has earned $1200 in interest revenue in the 2017 financial year from Douglas Ltd. 7. Nanette Ltd has earned $4800 in service revenue in the 2017 financial year from Douglas Ltd. 8. Assume a tax rate of 30%.

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Elimination Entries To eliminate the effects of interentity transactions as at 30 June 2017 the following journal entries need to be made 1 To elimina... View the full answer