Taballa Ltd owns all the share capital of Amaroo Ltd. The income tax rate is 30%. The following transactions took place during the periods ended 30 June 2023 or 30 June 2024. (a) On 1 May 2023, Amaroo Ltd sold inventories costing $600 to Taballa Ltd for $1 200 on credit. On 30 June 2023, only half of these goods had been sold by Taballa Ltd, and Taballa Ltd had paid $600 to Amaroo Ltd. All remaining inventories were sold to external entities by 30 June 2024 and Taballa Ltd paid the outstanding amount to Amaroo Ltd on 5 May 2024. (b) On 1 January 2023, Taballa Ltd sold an item of plant to Amaroo Ltd for $10 000. Immediately before the sale, Taballa Ltd had the item of plant on its accounts for $ 12 000. Taballa Ltd depreciated items at 5% p. a. on the diminishing balance and Amaroo Ltd used the straight-line method over 10 years. (c) An inventories item with a cost of $4 000 was sold by Taballa Ltd to Amaroo Ltd for $3 600 on 1 January 2024. Amaroo Ltd intended to use this item as equipment. Both entities charge depreciation at the rate of 10% p. a. on the diminishing balance on non-current assets. The item was still on hand at 30 June 2024. (d) Taballa Ltd provided management services to Amaroo Ltd during the period ended 30 June 2024. The total charge for those services was $5 000 that was unpaid at 30 June 2024. (e) Taballa Ltd borrows $60 000 from Amaroo Ltd on 1 July 2022 with an interest rate of 2% p.a. The loan is for 5 years. The interest is to be paid biannually in arrears, starting on 31 December 2022. Required 1. Prepare adjusting journal entries for the consolidation worksheet at 30 June 2023 and 30 June 2024 in relation to the intragroup transactions. 2. Explain in detail why you made each adjusting journal entry.
Taballa Ltd owns all the share capital of Amaroo Ltd. The income tax rate is 30%. The following transactions took place during the periods ended 30 June 2023 or 30 June 2024. (a) On 1 May 2023, Amaroo Ltd sold inventories costing $600 to Taballa Ltd for $1 200 on credit. On 30 June 2023, only half of these goods had been sold by Taballa Ltd, and Taballa Ltd had paid $600 to Amaroo Ltd. All remaining inventories were sold to external entities by 30 June 2024 and Taballa Ltd paid the outstanding amount to Amaroo Ltd on 5 May 2024. (b) On 1 January 2023, Taballa Ltd sold an item of plant to Amaroo Ltd for $10 000. Immediately before the sale, Taballa Ltd had the item of plant on its accounts for $ 12 000. Taballa Ltd depreciated items at 5% p. a. on the diminishing balance and Amaroo Ltd used the straight-line method over 10 years. (c) An inventories item with a cost of $4 000 was sold by Taballa Ltd to Amaroo Ltd for $3 600 on 1 January 2024. Amaroo Ltd intended to use this item as equipment. Both entities charge depreciation at the rate of 10% p. a. on the diminishing balance on non-current assets. The item was still on hand at 30 June 2024. (d) Taballa Ltd provided management services to Amaroo Ltd during the period ended 30 June 2024. The total charge for those services was $5 000 that was unpaid at 30 June 2024. (e) Taballa Ltd borrows $60 000 from Amaroo Ltd on 1 July 2022 with an interest rate of 2% p.a. The loan is for 5 years. The interest is to be paid biannually in arrears, starting on 31 December 2022. Required 1. Prepare adjusting journal entries for the consolidation worksheet at 30 June 2023 and 30 June 2024 in relation to the intragroup transactions. 2. Explain in detail why you made each adjusting journal entry.
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
Chapter5: The Income Statement And The Statement Of Cash Flows
Section: Chapter Questions
Problem 1RE: Brandt Corporation had sales revenue of 500,000 for the current year. For the year, its cost of...
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Transcribed Image Text:Taballa Ltd owns all the share capital of Amaroo Ltd. The income tax rate is 30%. The following transactions took place
during the periods ended 30 June 2023 or 30 June 2024. (a) On 1 May 2023, Amaroo Ltd sold inventories costing $600
to Taballa Ltd for $1 200 on credit. On 30 June 2023, only half of these goods had been sold by Taballa Ltd, and Taballa
Ltd had paid $600 to Amaroo Ltd. All remaining inventories were sold to external entities by 30 June 2024 and Taballa
Ltd paid the outstanding amount to Amaroo Ltd on 5 May 2024. (b) On 1 January 2023, Taballa Ltd sold an item of
plant to Amaroo Ltd for $10 000. Immediately before the sale, Taballa Ltd had the item of plant on its accounts for $
12 000. Taballa Ltd depreciated items at 5% p. a. on the diminishing balance and Amaroo Ltd used the straight-line
method over 10 years. (c) An inventories item with a cost of $4 000 was sold by Taballa Ltd to Amaroo Ltd for $3 600 on
1 January 2024. Amaroo Ltd intended to use this item as equipment. Both entities charge depreciation at the rate of
10% p. a. on the diminishing balance on non-current assets. The item was still on hand at 30 June 2024. (d) Taballa
Ltd provided management services to Amaroo Ltd during the period ended 30 June 2024. The total charge for those
services was $5 000 that was unpaid at 30 June 2024. (e) Taballa Ltd borrows $60 000 from Amaroo Ltd on 1 July 2022
with an interest rate of 2% p.a. The loan is for 5 years. The interest is to be paid biannually in arrears, starting on 31
December 2022. Required 1. Prepare adjusting journal entries for the consolidation worksheet at 30 June 2023 and 30
June 2024 in relation to the intragroup transactions. 2. Explain in detail why you made each adjusting journal entry.
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