F rance Ltd owns all the capital of Paris Ltd. On 1 July 2015 France Ltd sells
Question:
France Ltd owns all the capital of Paris Ltd.
On 1 July 2015 France Ltd sells machinery to Paris Ltd for $115,000. The tax rate is 30%
The machinery is shown in the records of France Ltd as:
Machinery (COST) | 93,000 |
Accumulated depreciation | (17,000) |
76,000 |
Assume the remaining useful life of the machinery is 14 years.
The treatment of the machinery in the group’s perspective would be to add the following consolidation adjustment entries on the date of sales and every year after. Assuming the date of consolidation is on 30 June 2019, the repeated group elimination entries are as follows:
Retained earnings | $39,000 | |
Machinery | $22,000 | |
Accumulated depreciation | $17,000 | |
Deferred tax asset | $11700 | |
Retained earnings | $11700 |
The consolidation adjustment entries in related to the depreciation adjustment of the machinery at 30 June 2019 are as follows:
Accumulated depreciation | (115,000 - 76,000) / 14 x 4 | |
Depreciation expense | (115,000 - 76,000) / 14 | |
Retained earnings | (115,000 - 76,000) / 14 x 3 | |
Income tax expense | ||
Retained earnings | xxx | |
Deferred tax asset |
Calculate and enter the amount of xxx (Retained earnings of 'closed' income tax expense)
Taxation Of Individuals And Business Entities 2015
ISBN: 9780077862367
6th Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver