Exam 20: Consolidation: Intragroup Transactions

Ali Ltd sold an item of plant to its subsidiary Baba Ltd on 1 January 2017 for $100 000.The asset had cost Ali Ltd $120 000 when acquired on 1 January 2015.At that time the remaining useful life of the plant was assessed at 5 years.The adjustment necessary on consolidation as at 30 June 2018 in relation to the sale of plant will result in:

Where a dividend is declared in a prior period and paid in a current period,the credit in the consolidation elimination entry is made against the dividend declared/paid account.

The effect of an intragroup sale of inventory in a prior period,where the inventory is still on hand at the end of that prior period,is that a debit consolidation adjustment is made to opening retained earnings.

A subsidiary entity sold goods to its parent entity for $100 000.The inventory originally cost the subsidiary $125 000.At reporting date,the parent still held all of the inventory.Which of the following adjustments must be included as part of the consolidation entry to eliminate this transaction?

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

Abra Ltd sold an item of plant to its subsidiary Cadabra Ltd on 1 January 2017 for $50 000.The asset had cost Abra Ltd $60 000 when acquired on 1 January 2015.At that time the useful life of the plant was assessed at 6 years.Rounded to the nearest dollar,the consolidation elimination entries at 30 June 2017 in relation to the sale of plant are which of the following?

During the year ended 30 June 2014,a subsidiary sold inventory to its parent at a before-tax profit of $20 000.The inventory originally cost the subsidiary $87 000.At 30 June 2014 all the inventory was still on hand and it was sold to an external party in July 2014.Ignoring tax effects,the consolidation adjustment entry to eliminate this transaction during the year ended 30 June 2015 would include which of the following line items?

During the year ended 30 June 2017,a parent entity rents a warehouse from a subsidiary entity for $200 000.The company tax rate is 30%.Which of the following is the consolidation adjustment entry needed at reporting date to eliminate the transaction?

A consolidation worksheet adjustment to eliminate the effect of interest revenue and interest expense relating to intragroup loans has which of the following tax effects?

When an entity sells a non-current asset at a profit to another entity within the same group,which of the following adjustments is necessary on consolidation?

When a depreciable non-current asset is sold between entities within a group,any gain recognised on the sale is eliminated and realised through consolidation adjustments which result in increased depreciation expenses in future periods.

Knights Ltd purchased inventory from its subsidiary,Gidley Ltd,for $20 000.The goods originally cost Gidley Ltd $12 000.The company tax rate is 30%.Assuming that all of the inventory was still on hand at the end of the year,which of the following consolidation adjustment entries is required?

Which of the following items is an example of an intragroup service?

Which of the following intragroup transactions do not affect the carrying amounts of assets and liabilities?

Adam Ltd sold an item of plant to its subsidiary Eve Ltd on 1 January 2017 for $50 000.The asset had cost Adam Ltd $60 000 when acquired on 1 January 2015.At that time,the remaining useful life of the plant was assessed at 5 years.The adjustment necessary on consolidation to reflect the tax effect of the depreciation adjustment for the year ended 30 June 2017 will result in a decrease in:

In May 2014,a parent sold inventory to a subsidiary entity for $60 000.The inventory had previously cost the parent entity $48 000.The entire inventory is still held by the subsidiary at reporting date,30 June 2014.Ignoring tax effects,which of the following is the adjustment entry in the consolidation worksheet at reporting date?

The effect of an intragroup sale of inventory at a profit,where the inventory has been sold to external parties prior to the end of the reporting period,is that both profit and the inventory asset are overstated.

The effect of an intragroup sale of inventory in a prior period,where the inventory is still on hand at the end of the current period,is that a credit adjustment is made to inventory in the current period.

A parent entity sold a depreciable non-current asset to a subsidiary entity for $5600.The asset originally cost $6000 and at the date of sale accumulated depreciation was $1000.The amount of the unrealised gain on sale to be eliminated is:

The effect of an intragroup sale of inventory in a prior period,where the inventory is still on hand at the end of the prior period but is sold in the current period,is that a credit adjustment is made to income tax expense in the subsequent period.