Prepare consolidation adjustments in consolidation journal

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Reference no: EM132651890

On 1 July 2017, Linton Ltd acquired 80% of the share capital of Baker Ltd for $760,000. On that date, the shareholders' equity of Baker Ltd consisted of share capital and retained earnings which were:

Share Capital (160,000 shares) $640,000
Retained Earnings $200,000

At 1 July 2017, all the assets and liabilities of Baker Ltd were recorded at amounts equal to fair value except for land and plant. Land had a carrying amount of $500,000 and a fair value of $560,000. Plant had a fair value of $120,000 and a carrying amount of $90,000 (original cost $150,000). Land was sold on 31 December 2019. The remaining useful life of the plant at date of acquisition is 5 years.
During the financial year ended 30 June 2020, Baker Ltd sold to Linton Ltd goods which cost $40,000 for $80,000. At 30 June 2020, 40% of the goods had not been sold by Linton Ltd.
During the financial year ended 30 June 2020, Baker Ltd paid a dividend of 10¢ per share. No other dividends had been paid by Baker Ltd.
On 2 July 2017, Baker Ltd sold an item of inventory to Linton Ltd at a profit of $24,000 before tax. Linton Ltd records this asset as equipment and applies a 10% straight line depreciation method.
For the year ended 30 June 2020, the operating profit after tax of Baker Ltd was $120,000. At 30 June 2019, the balance in retained earnings of Baker Ltd was $576,000.
The tax rate is 30%.
Linton Ltd satisfied the requirements of AASB 10 regarding capacity to control Baker Ltd during the required period, and applies the partial goodwill method.

Required

Question 1: Prepare consolidation adjustments, including any non-controlling interest, in consolidation journal form according to AASB 10 Consolidated Financial Statements as at 30 June 2020.

Reference no: EM132651890

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