Tians owns all the share capital of Veronisi The following
Tians owns all the share capital of Veronisi. The following transactions relate to the period ended December 31, 2013.
1. On January 1, 2012, Tians sold a motor vehicle to Veronisi for $15,000. This had a carrying amount to Tians of $12,000. Both entities depreciate motor vehicles on a straight-line basis over 10 years.
2. On June 30, 2013, Veronisi sold machinery to Tians for $62,000, its cost to Veronisi being only $55,000. Tians charges depreciation on these machines at 20% p.a. on cost.
3. Tians manufactures certain items that it then markets through Veronisi. During the current period, Tians sold for $12,000 items to Veronisi at cost plus 20%. Veronisi has sold 75% of these transferred items at December 31, 2013.
4. Veronisi also sells second-hand machinery. Tians sold one of its depreciable assets (original cost $40,000, accumulated depreciation $32,000) to Veronisi for $5,000 on June 30, 2013.Veronisi had not resold the item by
December 31, 2013.
5. Veronisi sold a depreciable asset (carrying amount of $22,000) to Tians on January 1, 2012, for $25,000. Both entities charge depreciation at a rate of 10% p.a. on cost in relation to these items. On June 30, 2013, Tians sold this asset to Avonara for $20,000.
Assuming an income tax rate of 30%, provide adjustments to be included in the consolidated financial statement as at December 31, 2013.
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