Reference no: EM133017129

Question - Pfizer Ltd owns all of the shares of Biotech Ltd. In relation to the following intragroup transactions, all parts of which are independent unless specified, prepare the consolidation worksheet adjusting entries for preparation of the consolidated financial statements as at 30 June 2021. Assume an income tax rate of 30%.

Part A - In the 2020-21 period, Biotech Ltd sold inventory to Pfizer Ltd. Total sales were $200,000, these being sold at cost plus 25%. At 30 June 2020, Pfizer Ltd still held 50% of the inventory that it had bought from Biotech Ltd.

Part B - On 1 January 2020, Biotech Ltd sold the Machinery to Pfizer Ltd for $400 000. At the date of sale, Biotech Ltd had recorded a carrying amount of $320,000. Pfizer Ltd charged depreciation at the rate of 10% p.a. on this item.

Part C - On 1 May 2020, Pfizer Ltd sold inventory to Biotech Ltd for $66,000, recording a before-tax profit of $14000. All this inventory acquired from Pfizer ltd remained on hand at 30 June 2020. During January 2021, Biotech Ltd sold all of this inventory to external entities for $100,000.

Part D - On 1 January 2021, Pfizer Ltd acquired $60?000 of debentures previously issued by Biotech Ltd. These were acquired on the open market for $60,000. The Half-Yearly Interest of $600 on debentures was paid on 30 June 2021.

Part E - During the period ended 30 June 2021, Biotech Ltd offered Accounting and Consulting services to Pfizer Ltd. Pfizer Ltd in return paid $500,000 for the services offered by Biotech Ltd.