Reference no: EM133085611
Question - On 1 July 2016, ABC Ltd purchased a 20 per cent shareholding in DFF Ltd for a cash consideration of $480 000. On the date of acquisition, the shareholders' equity of DFF Ltd is shown below:
Share capital $1,900,000
Retained earnings $500,000
Total shareholder's equity $2,400,000
Additional information:
For the year ending 30 June 2017 DFF Ltd recorded an after-tax profit of $280,000 and paid a dividend of $60,000 from the profit earned in the year ending 30 June 2017.
For the year ending 30 June 2018, DFF Ltd records an after-tax loss of $100,000.
On 30 June 2018, DFF Ltd revalued an item of equipment upwards by $80,000, resulting in an increase of $56,000 in Asset Revaluation Surplus account (assume a 30% tax rate).
Required - Prepare the journal entries required for the year ending 30 June 2017 and 30 June 2018 in the books of ABC Ltd using Equity Accounting?
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