Attlee Ltd holds 28% of the issued shares of Nehru Ltd. Attlee Ltd acquired these
shares on 1 July 2019 and on this date all the identifiable assets and liabilities of Nehru Ltd
were recorded at amounts equal to their fair values. Attlee Ltd does not have
subsidiaries, and records its investment in the associate, Nehru Ltd, in accordance with
AASB 128.
Nehru Ltd recorded an after-tax profit of $509,300 in the 2020-2021 period. During this period,
the following events occurred between Attlee Ltd and Nehru Ltd:
i. In February 2021, Attlee Ltd sold some inventories to Nehru Ltd for $63,700
Original cost of this inventory was $48,100. Nehru Ltd sold 40% of these
inventories by 30 June 2021.
ii. On 1 April 2021, Nehru Ltd sold a truck (motor vehicle) to Attlee Ltd for
$90,500. The truck had originally cost Nehru Ltd $141,500 and was written down
to $70,700 for both tax and accounting purposes at the time of sale. Both
companies depreciate trucks at the rate of 20% p.a. on cost using straight-line
depreciation method.
iii. The opening inventory of Nehru Ltd included 50 items of inventory that it had
bought from Attlee Ltd for $45,300. It had cost Attlee Ltd $34,000 to
manufacture these items. All of these items were sold externally by 30 June 2021
Required:
Prepare the journal entries in the records of Attlee Ltd in relation to its investment in
Nehru Ltd for the year ended 30 June 2021. Must show all calculations as they carry marks.
Assume the tax rate is 30%.

Answer rating: 100% (QA)

Answer A Ltd Hold s 28 of Shares on N Ltd ON January 1 2019 N Ltd After tax Profit s is 509300 i A L... View the full answer