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Calculate the amount of amani ltd''s share of sajaya ltd

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Reference no: EM132972950

On 1 July 2020, Amani Ltd acquires 20 percent of the shares of Sajaya Ltd by issuing 10,000 shares at $2.60 per share. During the financial year ending 30 June 2021, Sajaya Ltd makes an after-tax profit of $50,000 and provides for a dividend of $20,000.

This profit includes the following transactions:

  • Sajaya Ltd sells inventory to Janani Ltd for a profit of $9,000 but at the end of the year, 60% of inventory is still on hand.
  • Sajaya Ltd also sells office furniture to Lalani Ltd for a profit of $7,000 on the time of disposal.
  • The company tax rate is assumed to be 30%.(Note: Amani Ltd also acquires 30% shares of Janani Ltd - another associate of Amani Ltd and Lalani Ltd is a 100% owned subsidiary of Amani Ltd).

Required:

Problem 1: Calculate the amount of Amani Ltd's share of Sajaya Ltd's adjusted profit after adjusting the unrealised profit from selling inventory and office furniture for the year ended 30 June 2021.

Problem 2: Prepare journal entries for Amani Ltd's interest in the associate Sajaya Ltd for the year ended 30 June 2021 as required by AASB128.

Reference no: EM132972950

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