Reference no: EM133068904
Question - Freeman Ltd acquired 70% of the issued capital of Isla Ltd on 1 July 2017. The following transactions occurred.
On 1 July 2019, Freeman Ltd purchased a machine from Isla Ltd for $1,400,000. The machine had originally cost Island Ltd $1,100,000 when acquired on 1 July 2018. Isla Ltd had been depreciating the machine over 11 years using the straight-line method. Freeman Ltd expected the remaining useful life of the machine to be 10 years and also depreciates using the straight-line method.
In January 2020, Isla Ltd sold inventory costing $350,000 to Freeman Ltd for $430,000. All of this inventory remained on hand as at 30 June 2020 but was sold by 30 June 2021.
In May 2021, Freeman Ltd sold inventory costing $90,000 to Isla Ltd for $110,000. One quarter of this inventory remained on hand as at 30 June 2021.
REQUIRED - Based on the information provided: Prepare the intra-group journal entries, including all related tax effects, required upon consolidation as at 30 June 2021. The tax rate is 30%. Note: NCI allocation journals are not required.
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