6. Dividends (3 marks) Z declared and paid dividends of $200,000 to its shareholders on 1 October 20X2. Y declared and authorised dividends of $300,000 to its shareholders on 1 December 20X1 that were paid on 28 February 20X2. X only recognises dividends from Y when received in cash. 7. Transfer of land (2 marks) X transferred land to Z on 1 July 20X0 for a cash consideration of $500,000. The land had been recorded in X’s books at $150,000. 8. Transfer of plant (5 marks) X transferred plant to Z on 1 January 20X2 for a cash consideration of $900,000. At the date of the transfer, the plant had a carrying amount to X of $600,000 (cost $1,100,000 and accumulated depreciation $500,000). The remaining useful life of the plant at 1 January 20X2 is three years.
2 Other information All companies in the group use the periodic inventory system. The income tax rate is 30% REQUIRED Based on the information provided prepare the consolidation journal entries required at 31 December 20X2 to eliminate or adjust the financial effects of the above intra- group transactions.
3 SOLUTION - QUESTION 14 (25 marks) 1. Elimination of unrealised profits in opening inventory of Z Ltd (1.1.X2) purchased from X Ltd, $1,500,000 - $1,200,000, and tax consequence at 30%. MARKS DR Retained profits 1.1.X2 210,000 1 DR Income tax expense 90,000 1 CR COGS (Opening Inventory) 300,000 1 3 2.
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