On 1 July 2018, Brown Ltd acquired all of the issued capital of Peach Ltd for...
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On 1 July 2018, Brown Ltd acquired all of the issued capital of Peach Ltd for $400,000. The following transactions occurred between the two entities since the acquisition: a. On 1 January 2021, Peach Ltd sold an item of inventory to Brown Ltd for $18,000. The inventory had cost $19,000 to produce. At 30 June 2021, a quarter of the inventory was sold to an external party. b. Brown Ltd sold a machine to Peach Ltd for $20,000 on 1 May 2021. The machine had a carrying amount of $18,000 at the date of sale. Peach Ltd recorded the machine as inventory. The item remains on hand as at 30 June 2021. C. Peach Ltd sold a vehicle to Brown Ltd for $75,000 on 2 July 2018. The carrying amount of the vehicle was $70,000 at the date of sale. d. Brown Ltd rented a warehouse to Peach Ltd for $24,000 per annum. The rental payments are made semi-annually on 1 January and 1 July each year. e. Profit after tax for the year ending 30 June 2021 of Brown Ltd and Peach Ltd are $50,000 and $31,000, respectively. f. Retained earnings of both entities are as follows: 30 June 2021 30 June 2020 Brown Ltd Peach Ltd $400,000 $188,000 $350,000 $160,000 Brown Ltd and Peach Ltd depreciate items of Property, Plant & Equipment at 20% p.a. on a straight-line basis. The tax rate is 30%. Required Prepare the consolidation worksheet journal entries for the preparation of the consolidated financial statements of Brown Ltd at 30 June 2021 in accordance to IRFS 3/AASB 3 Business Combinations and IFRS 10/ AASB 10 Consolidated Financial Statements. Show all workings. Narration for each transaction is required. On 1 July 2018, Brown Ltd acquired all of the issued capital of Peach Ltd for $400,000. The following transactions occurred between the two entities since the acquisition: a. On 1 January 2021, Peach Ltd sold an item of inventory to Brown Ltd for $18,000. The inventory had cost $19,000 to produce. At 30 June 2021, a quarter of the inventory was sold to an external party. b. Brown Ltd sold a machine to Peach Ltd for $20,000 on 1 May 2021. The machine had a carrying amount of $18,000 at the date of sale. Peach Ltd recorded the machine as inventory. The item remains on hand as at 30 June 2021. C. Peach Ltd sold a vehicle to Brown Ltd for $75,000 on 2 July 2018. The carrying amount of the vehicle was $70,000 at the date of sale. d. Brown Ltd rented a warehouse to Peach Ltd for $24,000 per annum. The rental payments are made semi-annually on 1 January and 1 July each year. e. Profit after tax for the year ending 30 June 2021 of Brown Ltd and Peach Ltd are $50,000 and $31,000, respectively. f. Retained earnings of both entities are as follows: 30 June 2021 30 June 2020 Brown Ltd Peach Ltd $400,000 $188,000 $350,000 $160,000 Brown Ltd and Peach Ltd depreciate items of Property, Plant & Equipment at 20% p.a. on a straight-line basis. The tax rate is 30%. Required Prepare the consolidation worksheet journal entries for the preparation of the consolidated financial statements of Brown Ltd at 30 June 2021 in accordance to IRFS 3/AASB 3 Business Combinations and IFRS 10/ AASB 10 Consolidated Financial Statements. Show all workings. Narration for each transaction is required.
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Consolidated entries 1 sale ac Dr 18000 To purchase 18000 eliminated of inter compa... View the full answer
Related Book For
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
Posted Date:
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