Reference no: EM132963788
Problem - Tim Tam Ltd owns all the issued shares of Cookie Lid, having acquired its ownership interest on 1 July 2018. Since acquisition, the following intragroup transactions occurred. Assume an income tax rate of 30%.
a. On 1 January 2019, Cookie Ltd sold a building for $300,000 to Tim Tam Lid. At the date of sale, Cookie Lid had recorded the asset at a carrying amount of $170,000 (accumulated depreciation: $30 000. depreciation rate: 10% p.a. straight-line method).
b. Tim Tam Lid provided office space to Cookie Lid for a 3-month period ending 30 June 2020, charging the company $20 000 for the services provided. As at 30 June 2020, $5 000 of the rental remains unpaid.
c. On 1 August 2019, Tim Tam Lid sold inventory to Cookie Lid for $25,000, recording a before-tax profit of $3,000. By 30 June 2020, Cookie Lid has sold 50% of these to external entities for $6,000. Cookie Lid still holds the remaining inventory as at 30 June 2020.
Required - Prepare the consolidation worksheet entries at 30 June 2020 to adjust for the effects of the above inter-entity transactions (narrations are not required).