Prepare the consolidation journal entries

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Question - Bashundhara Ltd owns 100% of the shares of Ocean Ltd. These shares were acquired on 1 July 2019 for $3 million when the shareholders' funds of Ocean Ltd were:

Share capital $1,500,000

Retained earnings $1,200,000

$2,700,000

All assets of Ocean Ltd were fairly stated at acquisition date, except for a land that had a fair value $150000 more than carrying value.

During the 2019/2020 financial year, Ocean Ltd sold inventory to Bashundhara Ltd at a sales price of $600,000. The inventory cost Ocean Ltd $360,000 to produce. At 30 June 2010 half of the stock was still on hand with Bashundhara Ltd. In addition, Ocean Ltd paid an interim dividend of $120,000 out of post-acquisition profits to Bashundhara Ltd during the 2009/2010 financial year. The tax rate is 30%.

Based on the above information, prepare the consolidation journal entries that Bashundhara Ltd will need to pass on 30 June 2020.

Reference no: EM133042634

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