Reference no: EM132084576
Question - Investor prepares consolidated financial statements, multiple periods
On 1 July 2014, Harp Ltd purchased 30% of the shares of Lyre Ltd for $60 050. At this date, the ledger balances of Lyre Ltd were:
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Capital
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$150 000
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Assets
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$225 000
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Other reserves
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30 000
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Less: Liabilities
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(30 000)
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Retained earnings
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15 000
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|
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$195 000
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$ 195 000
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At 1 July 2014, all the identifiable assets and liabilities of Lyre Ltd were recorded at fair value except for plant whose fair value was $5000 greater than carrying amount. This plant has an expected future life of 5 years, the benefits being received evenly over this period. Dividend revenue is recognised when dividends are declared. The tax rate is 30%.
The results of Lyre Ltd for the next 3 years were:
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Profit/(loss) before income tax
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$50 000
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$40 000
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$(5 000)
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Income tax expense
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(20 000)
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(20 000)
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-
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Profit/(loss)
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30 000
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20 000
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(5 000)
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Dividend paid
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15 000
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5 000
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2 000
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Dividend declared
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10 000
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5 000
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1 000
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Required - Prepare, in journal entry format, for the years ending 30 June 2015, 2016 and 2017, the consolidation worksheet adjustments to include the equity-accounted results for the associate, Lyre Ltd, in the consolidated financial statements of Harp Ltd.
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