Additional information a Intragroup sales of inventory for the year ended 30

# Additional information a intragroup sales of

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Additional information a)Intragroup sales of inventory for the year ended 30 June 2009 from Sub Ltd to Parent Ltd are \$38,000 b)Unrealised profit in the closing inventory held by Parent Ltd is \$2,400 c)Unrealised profit in the opening inventory held by Parent Ltd is \$1,600 d)The corporate tax rate is 30% Required Prepare all consolidation journal entries for 30 June 2009
Page 2 of 3 Question 51 Solution PARENT LTD – SUB LTD 75% Parent Ltd Sub Ltd Patent Ltd 75% NCI 25% Acquisition analysis At 1 July 2004: Net fair value of identifiable assets, liabilities and contingent liabilities of Sub Ltd = \$60 000 + \$12 000 (equity) = \$72 000 Net fair value acquired = 75% x \$72 000 = \$54 000 Cost of combination = \$55 200 Goodwill = \$1 200 1. Pre-acquisition entry At 30 June 2009 : Retained Earnings (1/7/08) Dr 9 000 Share Capital Dr 45 000 Goodwill Dr 1 200 Shares in Sub Ltd Cr 55 200 2 NCI share of equity at 1/7/04 Retained Earnings (1/7/04) Dr 3 000 Share Capital Dr 15 000 NCI Cr 18 000 3. NCI share of equity: 1/7/04 - 30/6/08 Retained Earnings (1/7/08) Dr 4 250 General Reserve Dr 2 500 NCI Cr 6 750 (RP: 25% (\$29 000 - \$12 000) GR: 25% x \$10 000))
Page 3 of 3 4. NCI share of equity: 1/7/08 - 30/6/09 NCI Share of Profit Dr 3 250 NCI Cr 3 250 (25% x \$13 000) NCI Dr 1 200 Dividend Paid Cr 1 200 (25% x \$4 800) 5. Profit in opening inventory: Sub Ltd - Parent Ltd Retained Earnings (1/7/08) Dr 1 120 Income Tax Expense Dr 480 Cost of Sales Cr 1 600 6. NCI adjustment NCI Share of Profit Dr 280 Retained Earnings (1/7/08) Cr 280 (25% x \$1 120) 7. Profit in ending inventory: Sub Ltd - Parent Ltd Sales Dr 38 000 Cost of Sales Cr 35 600 Inventory Cr 2 400 Deferred Tax Asset Dr 720 Income Tax Expense Cr 720 8. NCI adjustment NCI Dr 420 NCI Share of Profit Cr 420 (25% x \$1 680) 9. Debentures Debentures liability Dr 5 000 Debentures in Sub Ltd Cr 5 000 10. Debenture interest Interest Revenue Dr 500 Financial Expenses Cr 500 11. Dividend paid Dividend Revenue Dr 3 600 Dividend Paid Cr 3 600 (75% x \$4 800)

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