Homework Help is Here – Start Your Trial Now!
Business
Accounting
Blupa Ltd acquired a 25% interest in Trinity Ltd for $145,000 on 1 July 2020. At that date, shareholders' equity of Trinity Ltd consisted of: Share Capital 280,000 Retained Earnings 86,000 All identifiable assets and liabilities of Trinity Ltd were recorded at fair value except for the machinery which was recorded at $25 000 below its fair value on 1 July 2020. Machinery is depreciated at 25% straight line. Information about income and changes in equity for Trinity Ltd for the year ended 30 June 2021 is as follows: Trinity Ltd Revenue 260,000 Expenses 120,000 Profit before income tax 140,000 Income tax expense 28,000 Profit for the period 112,000 Retained earnings (1/7/20) 86,000 198,000 Dividend paid 12,000 Dividend declared 35,000 47,000 Retained earnings (30/6/21) 151,000 Additional information: On 1 January 2021, Trinity Ltd sold Blupa Ltd equipment for $48,000. The equipment had originally cost Trinity Ltd $65,000'and had a carrying amount of $42,000 at the time of sale to Blupa Ltd. Both companies depreciate equipment at the rate of 10% per annum on cost. During the year ended 30 June 2021, Trinity Ltd sold inventory to Blupa Ltd for $24,000. The cost of this inventory to Trinity Ltd was $21,500. Half of this inventory is still on hand at the end of the year. Blupa Ltd regards Trinity Ltd as an 'associate' company. The tax rate is 30%. Required: Prepare the journal entries required by Blupa Ltd relating to its Investment in Trinity Ltd and subsequent transactions for the period from 1 July 2020 to 30 June 2021 assuming Blupa Ltd prepares consolidated financial statements.

Blupa Ltd acquired a 25% interest in Trinity Ltd for $145,000 on 1 July 2020. At that date, shareholders' equity of Trinity Ltd consisted of: Share Capital 280,000 Retained Earnings 86,000 All identifiable assets and liabilities of Trinity Ltd were recorded at fair value except for the machinery which was recorded at $25 000 below its fair value on 1 July 2020. Machinery is depreciated at 25% straight line. Information about income and changes in equity for Trinity Ltd for the year ended 30 June 2021 is as follows: Trinity Ltd Revenue 260,000 Expenses 120,000 Profit before income tax 140,000 Income tax expense 28,000 Profit for the period 112,000 Retained earnings (1/7/20) 86,000 198,000 Dividend paid 12,000 Dividend declared 35,000 47,000 Retained earnings (30/6/21) 151,000 Additional information: On 1 January 2021, Trinity Ltd sold Blupa Ltd equipment for $48,000. The equipment had originally cost Trinity Ltd $65,000'and had a carrying amount of $42,000 at the time of sale to Blupa Ltd. Both companies depreciate equipment at the rate of 10% per annum on cost. During the year ended 30 June 2021, Trinity Ltd sold inventory to Blupa Ltd for $24,000. The cost of this inventory to Trinity Ltd was $21,500. Half of this inventory is still on hand at the end of the year. Blupa Ltd regards Trinity Ltd as an 'associate' company. The tax rate is 30%. Required: Prepare the journal entries required by Blupa Ltd relating to its Investment in Trinity Ltd and subsequent transactions for the period from 1 July 2020 to 30 June 2021 assuming Blupa Ltd prepares consolidated financial statements.

Financial Accounting
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter15: Investments And Fair Value Accounting
Section: Chapter Questions
Problem 28E
See similar textbooks
icon
Related questions
Question
Blupa Ltd acquired a 25% interest in Trinity Ltd for $145,000 on 1 July 2020. At that date, shareholders' equity of Trinity Ltd consisted of: Share Capital 280,000 Retained Earnings 86,000 All identifiable assets and liabilities of Trinity Ltd were recorded at fair value except for the machinery which was recorded at $25 000 below its fair value on 1 July 2020. Machinery is depreciated at 25% straight line. Information about income and changes in equity for Trinity Ltd for the year ended 30 June 2021 is as follows: Trinity Ltd Revenue 260,000 Expenses 120,000 Profit before income tax 140,000 Income tax expense 28,000 Profit for the period 112,000 Retained earnings (1/7/20) 86,000 198,000 Dividend paid 12,000 Dividend declared 35,000 47,000 Retained earnings (30/6/21) 151,000
Transcribed Image Text:Blupa Ltd acquired a 25% interest in Trinity Ltd for $145,000 on 1 July 2020. At that date, shareholders' equity of Trinity Ltd consisted of: Share Capital 280,000 Retained Earnings 86,000 All identifiable assets and liabilities of Trinity Ltd were recorded at fair value except for the machinery which was recorded at $25 000 below its fair value on 1 July 2020. Machinery is depreciated at 25% straight line. Information about income and changes in equity for Trinity Ltd for the year ended 30 June 2021 is as follows: Trinity Ltd Revenue 260,000 Expenses 120,000 Profit before income tax 140,000 Income tax expense 28,000 Profit for the period 112,000 Retained earnings (1/7/20) 86,000 198,000 Dividend paid 12,000 Dividend declared 35,000 47,000 Retained earnings (30/6/21) 151,000
Additional information: On 1 January 2021, Trinity Ltd sold Blupa Ltd equipment for $48,000. The equipment had originally cost Trinity Ltd $65,000'and had a carrying amount of $42,000 at the time of sale to Blupa Ltd. Both companies depreciate equipment at the rate of 10% per annum on cost. During the year ended 30 June 2021, Trinity Ltd sold inventory to Blupa Ltd for $24,000. The cost of this inventory to Trinity Ltd was $21,500. Half of this inventory is still on hand at the end of the year. Blupa Ltd regards Trinity Ltd as an 'associate' company. The tax rate is 30%. Required: Prepare the journal entries required by Blupa Ltd relating to its Investment in Trinity Ltd and subsequent transactions for the period from 1 July 2020 to 30 June 2021 assuming Blupa Ltd prepares consolidated financial statements.
Transcribed Image Text:Additional information: On 1 January 2021, Trinity Ltd sold Blupa Ltd equipment for $48,000. The equipment had originally cost Trinity Ltd $65,000'and had a carrying amount of $42,000 at the time of sale to Blupa Ltd. Both companies depreciate equipment at the rate of 10% per annum on cost. During the year ended 30 June 2021, Trinity Ltd sold inventory to Blupa Ltd for $24,000. The cost of this inventory to Trinity Ltd was $21,500. Half of this inventory is still on hand at the end of the year. Blupa Ltd regards Trinity Ltd as an 'associate' company. The tax rate is 30%. Required: Prepare the journal entries required by Blupa Ltd relating to its Investment in Trinity Ltd and subsequent transactions for the period from 1 July 2020 to 30 June 2021 assuming Blupa Ltd prepares consolidated financial statements.
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Consolidations
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Financial Accounting
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L…
Auditing: A Risk Based-Approach (MindTap Course L…
Accounting
ISBN:
9781337619455
Author:
Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
SWFT Comprehensive Vol 2020
SWFT Comprehensive Vol 2020
Accounting
ISBN:
9780357391723
Author:
Maloney
Publisher:
Cengage
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
SWFT Corp Partner Estates Trusts
SWFT Corp Partner Estates Trusts
Accounting
ISBN:
9780357161548
Author:
Raabe
Publisher:
Cengage
SEE MORE TEXTBOOKS