Liala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The following transactionsoccurred between the two entities: On 1 June 2016, Liala Ltd sold inventory to Jordan Ltd for $12,000, this inventory previouslycosted Liala Ltd $10,000. By 30 June 2016, Jordan Ltd had sold 20% of this inventory to otherentities for $3,000. The other 80% was all sold to external entities by 30 June 2017 for $13,000. During the 2016–17 period, Jordan Ltd sold inventory to Liala Ltd for $6,000, this being at costplus 20% mark-up. Of this inventory, 20 % remained on hand in Liala Ltd at 30 June 2017. Thetax rate is 30%.Required:(i) Prepare the consolidation worksheet entries for Liala Ltd at 30 June 2017 in relation to the intragroup transfers of inventory. (ii) Compute the amount of cost of goods sold to be reported in the consolidated incomestatement for 2017 relating to the relevant intra-group sales. b) On 1 July 2016, Liala ltd sold an item of plant to Jordan Ltd Ltd for $150,000 when its carrying valuein Liala Ltd book was $200,000 (costs $300,000, accumulated depreciation$100,000). This planthas a remaining useful life of five (5) years form the date of sale. The group measures its property plants and equipment using a costs model. Tax rate is 30 percent.Required:Prepare the necessary journal entries in 30 June 2017 to eliminate the intra-group transfer of equipment.
Liala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The following transactions
occurred between the two entities:
On 1 June 2016, Liala Ltd sold inventory to Jordan Ltd for $12,000, this inventory previously
costed Liala Ltd $10,000. By 30 June 2016, Jordan Ltd had sold 20% of this inventory to other
entities for $3,000. The other 80% was all sold to external entities by 30 June 2017 for $13,000.
During the 2016–17 period, Jordan Ltd sold inventory to Liala Ltd for $6,000, this being at cost
plus 20% mark-up. Of this inventory, 20 % remained on hand in Liala Ltd at 30 June 2017. The
tax rate is 30%.
Required:
(i) Prepare the consolidation worksheet entries for Liala Ltd at 30 June 2017 in relation to the intragroup transfers of inventory.
(ii) Compute the amount of cost of goods sold to be reported in the consolidated income
statement for 2017 relating to the relevant intra-group sales.
b) On 1 July 2016, Liala ltd sold an item of plant to Jordan Ltd Ltd for $150,000 when its carrying valuein Liala Ltd book was $200,000 (costs $300,000,
has a remaining useful life of five (5) years form the date of sale. The group measures its property plants and equipment using a costs model. Tax rate is 30 percent.
Required:
Prepare the necessary
NOTE : As per BARTLEBY guidelines, when multiple questions are given then first question is to be solved or otherwise mentioned.
On 01.01.2015,
Liala Ltd acquired all issued shares of Jordan Ltd.
On 01.06.2016,
Liala sold inventory to Jordon = $12000
Cost of inventory = $10000
Gross profit = $12000 - 10000
= $2000
By 30.06.2016,
20% of inventory sold = $3000
Balance = $12000 x 80%
= $9600
Unrealized profit on closing inventory = $2000 x 80%
= $1600
Consolidated journal entry will be
Unrealized profit(DEBIT) $1600 -
Closing inventory(CREDIT) - $1600
By 30.06.2017,
80% sold to external entities = $13000
Cost = $9600
Gross profit = $13000 - 9600
= $3400
No consolidated journal entry is recorded since the inventory of remaining is sold to outsiders.
During 2016- 17,
Jordan Ltd. sold inventory to Liala = $6000
Amount of $6000 = cost + 20% markup
Gross profit = $6000 x 20%/120%
= $1000
Closing inventory at 30.06.2017 = 20% remained
Unrealized profit on closing inventory = 20% x $1000
= $200
Consolidated journal entry will be
Unrealized profit(DEBIT) $200 -
Closing inventory(CREDIT) - $200
Step by step
Solved in 3 steps
