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Question - Parent Ltd acquired 56% of the equity in Sub Ltd on 1 April 2003 for $900 000.
Parent Ltd has requested your help in the preparation of their consolidated financial statements for the financial year ended 31 March 2020 and has provided you with the following information relating to the sale of inventories between the Parent Ltd and Sub Ltd:
During March 2020 Sub Ltd made sales to Parent Ltd of $ 13 500. The inventory sold cost Sub Ltd $12 000. At 31 March 2020, the inventory Parent Ltd had on hand included a third of this purchase from Sub Ltd.
During March 2019 Parent Ltd made sales to Sub Ltd of $2 900 and recognised a profit of $1 466. Sub Ltd sold this inventory on 4 April 2019.
Required - Prepare the necessary notional journal entries at 31 March 2020 in accordance with NZ IFRS 10 Consolidated Financial Statements and NZ IFRS 3 Business Combinations.
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