On 1 July 2020 P Ltd purchased 100% of the issued capital of S Ltd for a purchase price of $859,000. At that date the shareholders’ equity of S Ltd disclosed:Share capital $121,000General reserve $50,000Retained earnings $260,000Additional information:At the date of acquisition, all net identifiable assets of Sub Ltd were recorded at fair valueSales by S to P Ltd were $67,000.P Ltd sold inventory of $109,000 to S Ltd on 1 July 2021. The original cost of this inventory to P Ltd was $53,000. S Ltd has 47% of this inventory on hand at 30 June 2022Company tax rate is 30%Requirements:Provide all consolidation journal entries (including workings) in next part of this question Compute the amount of 'realised profit' of the inventory transaction above in the form of 'cost of goods sold' and enter the amount in the answer space below

Consolidation is a process of showing all the financial statements of the parent and the subsidiary…

Answered: e $67,000. P Ltd sold inventory of…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 26E

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On 1 July 2020 P Ltd purchased 100% of the issued capital of S Ltd for a purchase price of $859,000. At that date the shareholders’ equity of S Ltd disclosed:

Share capital $121,000

General reserve $50,000

Retained earnings $260,000

Additional information:

At the date of acquisition, all net identifiable assets of Sub Ltd were recorded at fair value
Sales by S to P Ltd were $67,000.
P Ltd sold inventory of $109,000 to S Ltd on 1 July 2021. The original cost of this inventory to P Ltd was $53,000. S Ltd has 47% of this inventory on hand at 30 June 2022
Company tax rate is 30%

Requirements:

Provide all consolidation journal entries (including workings) in next part of this question
Compute the amount of 'realised profit' of the inventory transaction above in the form of 'cost of goods sold' and enter the amount in the answer space below

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