Prepare the journal entries for the year ending

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Question - On 1 July 2014 Sunshine Ltd acquires a 25 per cent interest in Moonlight Ltd for a cash consideration of $440 000.

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For the year ending 30 June 2015, Moonlight Ltd records an after-tax profit of $80 000. A dividend of $50 000 is declared and ratified by Moonlight Ltd on 30 June 2015, with the dividend coming from profits earned in the 2014-15 financial year.

In October 2015 Moonlight Ltd pays the $50 000 dividends provided for on 30 June 2015.

For the year ending 30 June 2016, Moonlight Ltd records an after-tax loss of $20 000. On 30 June 2016 Moonlight Ltd declares dividends of $10 000, to be paid out of the profits earned in the 2015 financial year.

On 30 June 2016 Moonlight Ltd revalues its land upwards by an amount of $30 000.

Required - Prepare the journal entries for the year ending 30 June 2015 and 30 June 2016 to account for the investment in Moonlight Ltd assuming Sunshine Ltd is a NOT parent entity and use equity method.

Reference no: EM132679637

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