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Prepare consolidation elimination journal entries for year

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Reference no: EM132613833

On 1 July 2016, Gold Ltd acquired all the issued capital of Silver Ltd for a cash payment of $550 000 when the equity of Silver Ltd was:

Share capital $480 000

Retained earnings $ 50 000

At 1 July 2016, all assets of Silver Ltd were fairly valued, with the exception of an item of plant, with a carrying amount of $330 000, but a fair value of $390 000. The plant was initially acquired by Silver Ltd on 1 July 2012 for $550 000 when it had an estimated useful life of 10 years, with no residual value.

Tax rate is 30%. Gold Ltd also has small shareholdings in other companies.

Problem 1- Gold Ltd has a loan outstanding that it had previously made to Silver Ltd of $75 000.

During the year ending 30 June 2019, Silver Ltd paid interest of $7 500 to Gold Ltd.

Silver Ltd's interest payable balance was $1 800 at 30 June 2018, but this had decreased to $500 by 30 June 2019.

Silver Ltd has no other loans.

Prepare the consolidation elimination journal entries for the year ending 30 June 2019

Problem 2- Goodwill has been impaired by $4 000 for the year ending 30 June 2019. Previous impairments to goodwill recorded in prior years total $2 000.

Prepare the consolidation elimination journal entries for the year ending 30 June 2019

Reference no: EM132613833

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