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Prepare journal entries in the records of tony ltd

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Reference no: EM132812839

Question - Tony LTD owns 25% of the shares of its associate, Celeste LTD. At the acquisition date, there were no differences between the fair values and the carrying amounts of the identifiable assets and liabilities of the Celeste LTD. For 2015-2016, Celeste Ltd recorded a profit of $100000. During this period, Celeste Ltd paid a $10000 dividend, declared in June 2015, and an interim dividend of $8000. The rate is 30%.

a) On January 2016, Celeste LTD sold an item of plan to Tony Ltd for $15000. The carrying amount of the asset to Celeste Ltd at time of sale was $12000. Tony Ltd Applies a 15%pa straight- line method of depreciation.

b) A non-current asset with a carrying amount of $20000 was sold by Celeste Ltd to tony Ltd for $28000 on 1 June 2016. Tony Ltd regarded the item as inventory and still had the item on hand at 30 June 2016.

c) On 1 July 2014 sold an item of machinery t o Celeste Ltd for $6000. This item had cost Tony Ltd for $4000. Tony Ltd regarded this item as inventory whereas Celeste Ltd intended to use the item as a non-current asset. Celeste Ltd applied a 10% p.a on cost straight-line depreciation method.

Required - Prepare Journal entries in the records of Tony Ltd for the year ended 30 June 2016 in relation to its investment in Celeste LTD.

Reference no: EM132812839

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