Question: Question 6 10 Marks On 1 July 2018 P Ltd acquires 25 per cent of issued capital of Q Ltd for a cash consideration of

Question 6 10 Marks On 1 July 2018 P Ltd acquires 25 per cent of issued capital of Q Ltd for a cash consideration of $37,500. At the date of the acquisition, the shareholders' equity of Q Ltd is: Share capital $120,000 and Retained earnings $30,000. Additional information: For year ending 30 June 2019, Q Ltd records an after-tax prot of $30,000 and pays the $25,000 dividend For the year ending 30 June 2020, Q records an after-tax loss of $20,000 and pays $5,000 dividend P Ltd has a number of subsidiaries. Required: (i) Prepare journal entries under both the cost and equity method of accounting for the investment in Q Ltd for each of the years ended 30 June 2019 to 30 June 2020. 8 Marks (ii) Calculate the carrying amount of the investment in Q Ltd at 30 June 2020. 2 Marks l'Al B On 1 July 2020, Canberra Ltd enters into ajoint operation with New South Wales Ltd to form an unincorporated entity to produce a new type of building product. All the current and iture contributions are to be based on a 50:50 split, as are the future distributions of outputs. Canberra m initial contribution consists of $4,000,000 cash and New South Wales Ltd contributes machinery that is recorded at $3,800, 000. The fair value of machinery is $4,000,000. During the rst year of operation both parties contributed a nther $6,000,000 cash. Required: Provide the journal entries in the book of Canberra Ltd and in the book of New South Wales Ltd to account for the joint operators' contributions to the joint operation 7 Marks Ignore tax effect

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