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Prepare journal entry in consolidation journal to recognise

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Reference no: EM132809489

Vodka Ltd, a parent entity, acquires 30% interest in Tonic Ltd for a cash consideration of $77000 on 1 July 2019. On the date of acquisition, the shareholders' equity value of Tonic Ltd is $250000 represented by:

Share capital               $150000
Retained earnings             $100000

Additional information:

  • For the year ended 30 June 2020 Tonic Ltd reported an after-tax profit of $17500 from which it declared a dividend of $5000. The dividend was paid on 10 October, 2020.
  • For the year ended 30 June 2021, Tonic Ltd reported an after-tax profit of $30000 from which it declared a dividend of $4000.

REQUIRED:

Problem (i) Prepare the journal entries in the consolidation journal to recognise the investment for the year ended 30 June 2020.

Problem (ii) Prepare the journal entries in the consolidation journal to recognise the investment at 30 June 2021.

Reference no: EM132809489

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