Reference no: EM132920616

Geelong Ltd acquired 80 per centa cost of $1,500,000carrying amount of $150,000 less than its fair value of the share capital of Burwood Ltd on 1 July 2019 for . As at the date of acquisition, all assets of Burwood Ltd were valued at fair value, other than land that had a.

The recorded balances of shareholders' equity in Burwood Ltd as at 1 July 2019 were:

Share capital $ 1,050,000

Retained earnings 300,000

                       $ 1,350,000

Additional information

• The management of Geelong Ltd values any non-controlling interest at the proportionate share of Burwood Ltd's identifiable net assets.
• Burwood Ltd had a profit after tax of $210,000 for the year ended 30 June 2020.
• During the financial year to 30 June 2020, Burwood Ltd sold inventory to Geelong Ltd for a price of $180,000. The inventory cost Burwood Ltd $120,000 to produce, and 25 per cent of this inventory was still on hand with Geelong Ltd as at 30 June 2020.
• During the year, Burwood Ltd paid $30,000 in management fees to Geelong Ltd.
• On 1 July 2019, Burwood Ltd sold an item of plant to Geelong Ltd for $120,000 when it had a carrying amount of $120,000 (cost of $150,000, accumulated depreciation of $60,000). At the date of sale it was expected that the plant had a remaining useful life of four years, and no residual value.
• The tax rate is 30 per cent.

Required:

Problem 1: Prepare the consolidation journal entries for the year ended 30 June 2020.