Question

In: Accounting

(b) Melbourne Ltd owns 100 per cent of the shares of Bendigo Ltd, acquired on 1...

(b) Melbourne Ltd owns 100 per cent of the shares of Bendigo Ltd, acquired on 1 July, 2019 for $900,000 when the shareholders’ funds of Bendigo Ltd were: Share capital $450,000, Retained earnings $225,000 and Revaluation surplus $100,000. All assets of Bendigo Ltd are fairly stated at the acquisition date. The goodwill has been impaired by 10% in the year 2020. The following intra-group transactions took place during the 2020 financial year: Bendigo Ltd paid $60,000 dividend to Melbourne Ltd. Melbourne Ltd sells inventory to Bendigo Ltd at a sales price of $50,000. The inventory had previously cost Melbourne Ltd $40,000. Twenty five (25%) inventory is still on hand with Bendigo Ltd. Melbourne Ltd provided a management consultancy services to Bendigo during the year. Bendigo Ltd paid $7,500 in management fees to Melbourne Ltd. Melbourne Ltd sold plant costing $20,000 to Bendigo Ltd for $24,000. Melbourne Ltd had not charged any depreciation on the asset before the sale as it just purchased it from an external entity. Both entities depreciate items of plant at 20% p.a. on cost. The plant is still held by Bendigo Ltd. The tax rate is 30 per cent. Required: Prepare the relevant consolidated journal entries for the year ended 30 June 2020 (including tax effects where relevant.

Solutions

Expert Solution


Related Solutions

(b) Melbourne Ltd owns 100 per cent of the shares of Bendigo Ltd, acquired on 1...
(b) Melbourne Ltd owns 100 per cent of the shares of Bendigo Ltd, acquired on 1 July, 2019 for $900,000 when the shareholders’ funds of Bendigo Ltd were: Share capital $450,000, Retained earnings $225,000 and Revaluation surplus $100,000. All assets of Bendigo Ltd are fairly stated at the acquisition date. The goodwill has been impaired by 10% in the year 2020. The following intra-group transactions took place during the 2020 financial year: Bendigo Ltd paid $60,000 dividend to Melbourne Ltd....
The Wholesale Ltd acquired 80 per cent of the shares of House Construction Ltd on 30...
The Wholesale Ltd acquired 80 per cent of the shares of House Construction Ltd on 30 June 2020 for a consideration of $800,000. The share capital and reserves of House Construction Ltd at the date of acquisition were: Share capital $550,000 Retained earnings $100,000 Revaluation surplus $150,000 All assets of House Construction Ltd were fairly valued at the date of acquisition, except for a major plant that had a fair value $26,000 greater than its carrying amount. The cost of...
Melbourne Ltd acquired 100% of Sydney Ltd on 11 December 2016. On 1 January 2017, Sydney...
Melbourne Ltd acquired 100% of Sydney Ltd on 11 December 2016. On 1 January 2017, Sydney Ltd sold a machine to Melbourne Ltd for $80,000 and recorded a profit of $20,000. Melbourne Ltd will depreciate this machine on a straight-line basis over its useful life of 8 years. You, the group accountant, have just finished preparing the consolidated financial statements for the year ending 30 June 2020. Mrs Jones, CEO of Melbourne Ltd, is not an accountant and she doesn’t...
Hahndorf Ltd acquired 100% of the shares of Sarina Ltd on 1 July 2015 for $700,000,...
Hahndorf Ltd acquired 100% of the shares of Sarina Ltd on 1 July 2015 for $700,000, when the equity of Sarina Ltd consisted of: Share Capital $500,000 General Reserve 80,000 Retained Earnings 30,000 All identifiable assets and liabilities of Sarina Ltd were fairly valued at acquisition except the machinery, which had a fair value of $140,000. The machinery had a further 7-year life with depreciation based on the straight-line method. Selected financial information of the two entities as at 1...
Hahndorf Ltd acquired 100% of the shares of Sarina Ltd on 1 July 2015 for $700,000,...
Hahndorf Ltd acquired 100% of the shares of Sarina Ltd on 1 July 2015 for $700,000, when the equity of Sarina Ltd consisted of: Share Capital                                       $500,000 General Reserve                                      80,000 Retained Earnings                                   30,000 All identifiable assets and liabilities of Sarina Ltd were fairly valued at acquisition except the machinery, which had a fair value of $140,000. The machinery had a further 7-year life with depreciation based on the straight-line method. Selected financial information of the two entities as at 1...
Hahndorf Ltd acquired 100% of the shares of Sarina Ltd on 1 July 2015 for $700,000,...
Hahndorf Ltd acquired 100% of the shares of Sarina Ltd on 1 July 2015 for $700,000, when the equity of Sarina Ltd consisted of: Share Capital $500,000 General Reserve 80,000 Retained Earnings 30,000 All identifiable assets and liabilities of Sarina Ltd were fairly valued at acquisition except the machinery, which had a fair value of $140,000. The machinery had a further 7-year life with depreciation based on the straight-line method. Selected financial information for both companies at 30 June 2018...
Jacky Oasis is a beauty consultant at Goodlook Ltd, and she owns 100% of the shares...
Jacky Oasis is a beauty consultant at Goodlook Ltd, and she owns 100% of the shares in this company. The company pays her a salary of $60,000 p.a. She has a long term relationship with John Kennedy and they plan to get married one day. John does not hold any shares in Goodlook Ltd. The Oasis Family Trust owns and leases commercial property. The trust is a complying trust and the beneficiaries are Jacky and her two sons. Three years...
On 1 July 2016, Soff Ltd purchased a 20 per cent shareholding in Willaott Ltd for...
On 1 July 2016, Soff Ltd purchased a 20 per cent shareholding in Willaott Ltd for a cash consideration of $480 000. On the date of acquisition, the shareholders’ equity of Willaott Ltd is shown below: Share capital $1 900 000 Retained earnings $ 500 000 Total shareholder’s equity $2 400 000 Additional information: For the year ending 30 June 2017 Willaott Ltd recorded an after-tax profit of $280 000 and paid a dividend of $60 000 from the profit...
Lo-Flyers Ltd is issuing a 10 year $100 bond with coupon interest of 10 per cent,...
Lo-Flyers Ltd is issuing a 10 year $100 bond with coupon interest of 10 per cent, paid quarterly. Similar bonds have a yield to maturity of 12 per cent. What is the value of the Lo-Flyers bond please show steps
Linx Ltd has acquired 70% of shares of Digital Ltd, and 35% of the shares of...
Linx Ltd has acquired 70% of shares of Digital Ltd, and 35% of the shares of Innex Ltd. If Linx Ltd was not a parent and therefore did not prepare consolidated financial statements, discuss what the differences would be in the equity accounting for Innex Ltd. (Assume 35% does not constitute control).
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT