On 1 July 2019, Foster Ltd acquired 100% of the issued ordinary shares of Bambino Ltd for $750000. At the time of acquisition, all identifiable assets and assumed liabilities of Bambino Ltd were recorded at fair value, except for land which had a fair value of $340000, which was $90000 greater than the book value in Bambino Ltd accounts. The shareholders’ equity of the company was as follows:

Share capital (ordinary shares) $ 450000

General reserve $ 60000

Retained earnings $220000

The following information relates to the year ending 30 June 2022:

1. During the year, Foster Ltd provided management services to Bambino Ltd for $30000.

2. Bambino Ltd sold inventory to Foster Ltd for $23000. This inventory cost Bambino Ltd $16000. At 30 June 2022, Foster Ltd was still holding 40% of this inventory.

3. Bambino Ltd paid 2.45% interest for the year to Foster Ltd on an intra-group loan of $300000.

4. On 30 June 2022, it was determined that goodwill on acquisition was impaired by $120000. In the previous year, impairment of goodwill amounting to $80000 had been recorded as part of the consolidation process.

5. On 1 July 2021, Foster Ltd sold equipment to Bambino Ltd for $60000. The equipment had been purchased by Foster Ltd for $80000 on 1 July 2018 and was being depreciated on a straight line over 8 years with no residual value. Cosistent with the original estimate, Bambino Ltd depreciates the asset over the remaining effective life on a straight-line basis with no residual value.

6. The company tax rate is 30%.

Required

Prepare all necessary consolidation journal entries, including any related income tax entries, as at 30 June 2022 according to the requirements of AASB 10 consolidated Financial Statements.

Answer rating: 100% (QA)

Answer Consolidation journal entries as at 30 June 2022 Dr Bambino Ltd Assets 340000 Cr B... View the full answer