Question

Amber Ltd owns all of the shares of VStone Ltd. In relation to the following intragroup transactions, all parts of which are independent unless specified, prepare the consolidation worksheet adjusting entries for preparation of the consolidated financial statements as at 30 June 2019. Assume an income tax rate of 30%.

(a) On 1 January 2018, Amber Ltd sold inventory costing $6000 to VStone Ltd at a transfer price of $9000. On 1 September 2018, VStone Ltd sold half these items of inventory back to Amber Ltd, receiving $3000 from Amber Ltd. Of the remaining inventory kept by VStone Ltd, half was sold in January 2019 to Goanna Ltd at a loss of $200. (b) On 1 January 2019, VStone Ltd sold an item of plant to Amber Ltd for $2000. Immediately before the sale, VStone Ltd had the item of plant on its accounts for $3000. VStone Ltd depreciated items at 5% p.a. on the diminishing balance and Amber Ltd used the straight-line method over 10 years. (c) On 1 July 2018, Amber Ltd sold a motor vehicle to VStone Ltd for $12 000. This had a carrying amount to Amber Ltd of $9600. Both entities depreciate motor vehicles at a rate of 10% p.a. on cost. (d) During the 2017–18 period, Amber Ltd sold inventory to VStone Ltd for $9000, recording a before-tax profit of $1800. Half this inventory was unsold by VStone Ltd at 30 June 2018. (e) VStone Ltd sells second-hand machinery. Amber Ltd sold one of its depreciable assets (original cost $80 000, accumulated depreciation $64 000) to VStone Ltd for $10 000 on 1 January 2019. VStone Ltd had not resold the item by 30 June 2019. (f) On 1 May 2019, VStone Ltd sold inventory costing $300 to Amber Ltd for $380 on credit. On 30 June 2019, only half of these goods had been sold by Amber Ltd, but Amber Ltd had paid $280 back to VStone Ltd.

requirment

prepare the consolidation worksheet adjusting entries for preparation of the consolidated financial statements as at 30 June 2019. Assume an income tax rate of 30%.

Answer 1

The answer is below...

1931 Sales gevenue te De 9000 De 9000 ) cost of sales ka 6ooo Inventory ca 3000 De fered Taic asset . Di 900 Income tax 900 asset ca ( 3000 x 3002) . Cost of goods puschase Dx 4500 puschase expenses a 3000 Inventosy 1500 Î Deoceeds on sale of plant 2000 Asset Depreciatiable amount of 62925 Ds 925 asset (3000-752 sold Asset De 925 CS Scanned withoes Loss on sale of plant a 925

27705 Income tax asset To Defesed Tax asset 27705 Accumalated Depecictwo Depreciations expense 200 200 10. (2000-c) 10: Income tax Go assense. tone asset Defered 60 Sale from motor vehicle 12,000 i el cost of sales Motor vehicle 9600 2400 Defesed tax exset be 720 Tincome tax exopget 720 4400X300) CS Scanned with CamScanner

trcamalated Depreciation - 240 To Depreciation openses 240 (2400x1oy.) Income tax - expense 72 Defered tax asset 72 (240x201003 Mae hinery 70,000 Sales of machinesy : 10,000 ...Cost of machinery 80,000 Incomel taic escpense 21,000 21000 Defered tere asset ( 70.000X 30%) Accumalated Depreciation 64,000 To Depreciation expenses 64,000 Income tax expenses cs Scanned with Defesed troe aset 19200 19200

Inventory cost of of puschase puschase 300 V stone Itd Ale 380 Income tone asset 24 Defered Tase on inventary 24 + Sales devenue Q80 Cost of sales Inventory 150 130 Defesed Taxe asset 39 1. Income Tax asset 39 C130 x 301) V stone ltd Alo De 280 CS Scanned with To sales revenue C 280 CamScanner