Fac2602-Assignment-02-Solutions-Semester-2-2022

FAC2602-
ASSIGNMENT-02-
SOLUTIONS-
SEMESTER-2-2022

, PART A

Draft the following pro-forma consolidation journal entries of the IWP Ltd Group
for the year ended 31 August 2022, after taking the above-mentioned information
into account:

(a) Elimination of the unrealised profit included in the opening and closing
inventory

DR CR
Retained Earnings – BigCat Ltd 66 666,67
Cost of sales – BigCat Ltd 66 666,67
Elimination of the unrealised profit included in the
opening inventory (400 000 x 20/120)

Cost of Sales – BigCat Ltd 58 333,33
Inventory – IWP Ltd 58 333,33
Elimination of the unrealised profit included in the
Closing inventory (350 000 x 20/120)




(b) Elimination of the profit on sale of the machine and the related depreciation
from the date of transaction.

DR CR
Retained Earnings – IWP Ltd 60 000,00
Machinery – BigCat Ltd 60 000,00
Elimination of profit on sale of machinery

Accumulated Depreciation – BigCat Ltd
(60 000 x 25% x 18/12) 22 500,00
Depreciation – IWP Ltd (60 000 x 25%) 15 000,00
Retained Earnings – IWP Ltd
(60 000 x 25% x 6/12) 7 500,00


(c) Recording of the non-controlling interest’s share in the current-year
revaluation surplus.