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Prepare the journal entries in the consolidation journal

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Reference no: EM132569470

Question - Vodka Ltd, a parent entity, acquires 21% interest in Tonic Ltd for a cash consideration of $39800 on 1 July 2019. On the date of acquisition, the shareholders' equity value of Tonic Ltd is $180000 represented by:

Share capital $108000

Retained earnings $72000

Additional information:

For the year ended 30 June 2020 Tonic Ltd reported an after-tax profit of $16200 from which it declared a dividend of $5000. The dividend was paid on 10 October, 2020.

For the year ended 30 June 2021, Tonic Ltd reported an after-tax profit of $30000 from which it declared a dividend of $4000.

The $4000 dividend declared during the year ended 30 June 2021, was paid on 10 October 2021.

REQUIRED -

(i) Prepare the journal entries in the consolidation journal to recognise the investment for the year ended 30 June 2020.

(ii) Prepare the journal entries in the consolidation journal to recognise the investment at 30 June 2021.

Reference no: EM132569470

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