NCI 2007 - Question 15(10 marks On 1 January 20X1 Parent Ltd acquired 70 of the ordinary voting shares of Child Ltd which in turn acquired 80 of the

NCI 2007 - Question 15(10 marks On 1 January 20X1 Parent...

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1 Question 15 (10 marks) On 1 January 20X1, Parent Ltd acquired 70% of the ordinary voting shares of Child Ltd which in turn acquired 80% of the ordinary voting shares of Grandchild Ltd. Child Ltd Parent Ltd Grandchild Ltd 70% 80% The fair value of the net assets of Grandchild Ltd at the date of acquisition are represented by total shareholders’ equity as follows: $ Share capital 500,000 Retained profits 600,000 Total shareholders' equity 1,100,000 The net profits of and dividends paid by Grandchild Ltd for the two years ending 31 December 20X1 and 31 December 20X2 are as follows: $ Net profit for 20X1 200,000 Dividends paid for 20X1 (30,000) Net profit for 20X2 400,000 There are no are other changes in the equity for Grandchild Ltd. Grandchild Ltd made a profit after tax of $70,000 from inventory sales to Parent Ltd during the 20X2 year and Parent Ltd has that inventory on hand with at year end. REQUIRED Based on the information provided prepare the consolidation journal entries necessary
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