Part i: Sandy Ltd purchased 100% of the issued capital of Beach Ltd for a cash consideration of $2 million on 1 July 2019. At that time the fair value of the net assets of Beach Ltd were represented by: Share capital Retained profits $1 500 000 $ 250 000 PART ii: During the period ended 30 June 2020, Sandy Ltd sold inventory that cost $240 000 for $300 000 to Beach Ltd. At the end of the period Beach Ltd had sold 80% of this inventory for $400 000. Both companies use a perpetual inventory system. The taxation rate is 30%. Required: a) Complete the consolidation journal entries as at 30 June 2020 (for both Part i and Part ii). Show your workings and calculations.
Part i: Sandy Ltd purchased 100% of the issued capital of Beach Ltd for a cash consideration of $2 million on 1 July 2019. At that time the fair value of the net assets of Beach Ltd were represented by: Share capital Retained profits $1 500 000 $ 250 000 PART ii: During the period ended 30 June 2020, Sandy Ltd sold inventory that cost $240 000 for $300 000 to Beach Ltd. At the end of the period Beach Ltd had sold 80% of this inventory for $400 000. Both companies use a perpetual inventory system. The taxation rate is 30%. Required: a) Complete the consolidation journal entries as at 30 June 2020 (for both Part i and Part ii). Show your workings and calculations.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 18P
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Part i: Sandy Ltd purchased 100% of the issued capital of Beach Ltd for a cash consideration of $2 million on 1 July 2019. At that time the fair value of the net assets of Beach Ltd were represented by:
|
Share capital Retained profits |
$1 500 000 $ 250 000 |
PART ii:
During the period ended 30 June 2020, Sandy Ltd sold inventory that cost $240 000 for $300 000 to Beach Ltd. At the end of the period Beach Ltd had sold 80% of this inventory for $400 000. Both companies use a perpetual inventory system. The
Required:
a) Complete the consolidation
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