Elimination of inter company sales from X Ltd to Z Ltd during the year to

Elimination of inter company sales from x ltd to z

This preview shows page 3 - 5 out of 5 pages.

Elimination of inter-company sales from X Ltd to Z Ltd during the year to 31.12.X2 MARKS DR Sales revenue 2,000,000 1 CR COGS (Purchases) 2,000,000 1 2 Elimination of unrealised profits in closing inventory of Z Ltd (31.12.X2) purchased from X Ltd, ($2,000,000 - $1,200,000) x 50%, and tax consequence at 30%. MARKS DR COGS (Closing Inventory) 400,000 1 CR Inventory (B/S) 400,000 1 DR Deferred tax asset 120,000 ½ CR Income tax expense 120,000 ½ 3 3. Elimination of inter-company account between X Ltd and Z Ltd at 31.12.X2. MARKS DR Inter-company payable to X Ltd 500,000 1 CR Inter-company receivable from Z Ltd 500,000 1 2 4. Elimination of inter-company borrowings from X Ltd to Y Ltd as at 31.12.X2 MARKS DR Borrowings (Loan payable) 1,000,000 ½ CR Loan receivable 1,000,000 ½ 1 Elimination of inter-company interest on borrowings from X Ltd to Y Ltd for 31.12.X2 MARKS DR Interest revenue 80,000 1 CR Interest expense 80,000 1 2
Image of page 3
4 5. Elimination of inter-company management fee from Y Ltd to X Ltd for 31.12.X2 MARKS DR Management fee revenue 50,000 1 CR Management fee expense 50,000 1 2 6. Elimination of inter-company dividend declared and paid by Z Ltd during the year to 31.12.X2, $200,000 x 60% MARKS DR Dividend revenue 120,000 1 CR Dividend paid 120,000 1 2 Elimination of inter-company dividend declared by Y Ltd during year to 31.12.X1 but paid during 31.12.X2, $300,000 x 80% MARKS DR Dividend revenue 240,000 ½ CR Retained profits 1.1.X2 240,000 ½ 1 7. Elimination of unrealised profit in land held by Z Ltd arising from inter- company transfer from Y Ltd to Z Ltd during the year to 31.12.X1, $500,000 - $150,000, and tax consequence at 30% MARKS DR Retained profits 1.1.X2 245,000 ½ DR Deferred tax asset 105,000 ½ CR Land (B/S) 350,000 1 2 8. Elimination of unrealised profit in plant held by Z Ltd from inter-company transfer from Y Ltd to Z Ltd during the year to 31.12.X2, $900,000 - $600,000, and tax consequence at 30% MARKS DR Gain on sale 300,000 1 DR Plant – at cost 200,000 ½ CR Accumulated depreciation - plant 500,000 ½ DR Deferred tax asset 90,000 ½ CR Income tax expense 90,000 ½ 3
Image of page 4
5 Elimination of excess depreciation recorded by Z Ltd on plant acquired from Y Ltd for the year to 31.12.X2, $300,000 x 1/3, and tax consequence at 30% MARKS DR Accumulated depreciation - plant 100,000 ½ CR Depreciation expense - plant 100,000 ½ DR Income tax expense 30,000 ½ CR Deferred tax asset 30,000 ½ 2
Image of page 5

You've reached the end of your free preview.

Want to read all 5 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes