Reference no: EM133177577
Question - On 1 January 2021, Good Brew Ltd purchased 90% of the shares of The Refined Bean Ltd, for $145,000. At the acquisition date, The Refined Bean Ltd's equity comprised:
Asset revaluation surplus: $12,000
Retained earnings: 16,000
Share capital: 90,000
On 1 January 2021, all the identifiable assets and liabilities of The Refined Bean Ltd were recorded at fair value.
Additional information:
(a) On 4 August 2021, Good Brew Ltd provided consulting services to The Refined Bean Ltd for $10,400. This is paid for on account.
(b) During the period ending 31 December 2021, The Refined Bean Ltd paid $15,000 in cash dividends.
(c) During the period ending 31 December 2021, The Refinedd Bean Ltd declared (but not yet paid) $8,000 in dividends.
(d) On 30 June 2021, The Refined Bean Ltd gave Good Brew Ltd a loan of $18,000, at an interest rate of 12%.
(e) On 31 August 2021, The Refined Bean Ltd sold land to Good Brew Ltd for $200,000. The original cost of the land to The Refined Bean Ltd was $150,000.
Required - Prepare the ORIGINAL (original entires by the parent and subsidiary before consolidation) journal entries of the parent and subsidiary for ALL consolidation entries EXCEPT the elimination of investment; AND prepare the ADJUSTING journal entries (all) for the consolidation worksheet in the first year after the acquisition, i.e. as at 31 December 2021.
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