Exam 25: Consolidation: Intragroup Transactions

A Ltd sold an item of plant to B Ltd on 1 January 20X7 for $25 000. The asset had cost A Ltd $30 000 when acquired on 1 January 20X5. At that time the useful life of the plant was assessed at 6 years. The consolidation elimination entries at 30 June 20X7 in relation to the sale of plant is (rounded to nearest dollar):

Janus Limited, a subsidiary entity, sold a non-current asset at a profit to its parent entity. The adjustment necessary on consolidation to reflect the tax effect of this transaction will result in an:

When an entity sells a non-current asset at a profit to another entity within the same group the following adjustment is necessary on consolidation:

A consolidation worksheet adjustment to eliminate the effect of interest revenue and interest expense relating to intragroup advances has the following tax effect:

Jameson purchased goods from its subsidiary for $10 000. The goods cost the subsidiary $6000. At reporting date, Jameson still held all of the goods. The company rate of tax is 30%. Which of the following consolidation adjustment entries is correct?

A subsidiary entity sold inventory to its parent entity at a profit of $4 000. The goods had originally cost the subsidiary $10 000. At the end of the year all the inventory was still on hand. The adjustment entry to deal with this transaction on consolidation would include the following line item:

If a dividend is paid out of profits that are earned after the acquisition date, it is known as:

When a subsidiary declares a final dividend payable to a parent who has a 100% interest in the subsidiary the parent recognises a dividend receivable and the subsidiary recognises a dividend payable. In addition to the elimination of these two items on consolidation, the following items must also be eliminated:

When eliminating an intragroup service which of the following would appear in the consolidation worksheet entry?

A Ltd sold an item of plant to B Ltd on 1 January 20X7 for $25 000. The asset had cost A Ltd $30 000 when acquired on 1 January 20X5. At that time the useful life of the plant was assessed at 6 years. The adjustment necessary on consolidation in relation to the transfer of plant as at 30 June 20X8 will result in:

On 16 May 20X4, Z Ltd sold equipment to N Ltd for $50 000, this asset having a carrying amount at time of sale of $40 000. The equipment was regarded by Z Ltd as a depreciable non-current asset, being depreciated at 10% p.a. on cost, whereas N Ltd records the machinery as inventory. The asset was sold by N Ltd before 30 June 20X4. The worksheet entry for the year ended 30 June 20X3 would include the following adjustment:

A subsidiary entity sold goods to its parent entity at a profit of $10 000. The goods had originally cost the subsidiary $15 000. At reporting date, the parent still held all of the goods. Which of the following adjustments must be included as part of the consolidation entry to eliminate this transaction?

If an entity sells a non-current asset at a profit to another entity within the same group the following consolidation adjustment is necessary to reflect the tax effect:

A subsidiary entity sold inventory to its parent entity at a profit of $8 000. The goods had originally cost the subsidiary $20 000. At the end of the year all the inventory was still on hand. The adjustment entry to deal with this transaction on consolidation would include the following line item:

A Ltd sold an item of plant to B Ltd on 1 January 20X7 for $25 000. The asset had cost A Ltd $30 000 when acquired on 1 January 20X5. At that time the useful life of the plant was assessed at 6 years. The adjustment necessary on consolidation to reflect the tax effect of the depreciation adjustment for the year ended 30 June 20X7 will result in an increase in:

During the year ended 30 June 20X7 a subsidiary entity sold inventory to its parent entity at a profit of $8 000. The goods had originally cost the subsidiary $20 000. At the end of 30 June 20X7 all the inventory was still on hand. Ignoring tax effects, the adjustment entry to deal with this transaction on consolidation during the year ended 30 June 20X8 would include the following line item:

The test indicating that an intragroup business transaction has been realised is:

A parent entity group sold a depreciable non-current asset to a subsidiary entity for $2800. The asset originally cost $3000 and at the date of sale accumulated depreciation was $500. The amount of the unrealised gain on sale to be eliminated is:

In May 20X7, a parent entity sold inventory to a subsidiary entity for $30 000. The inventory had previously cost the parent entity $24 000. The entire inventory is still held by the subsidiary at reporting date, 30 June 20X7. Ignoring tax effects, the adjustment entry in the consolidation worksheet at reporting date is:

A subsidiary entity sold inventory to a parent entity for $30 000. The inventory had previously cost the subsidiary entity $24 000. By reporting date the parent entity had sold 75% of the inventory to a party outside the group. The company tax rate is 30%. The adjustment entry in the consolidation worksheet at reporting date is: