Please help me in the following question. (1)Complete the consolidation i ntra g

Question

Please help me in the following question.

(1)Complete the consolidation intra group journals for the following transactions:

(a)During the year, Gino Wines Pty Ltd sold wine for $15000 to Gino Constructions Pty Ltd. This wine cost Gino Wines Pty Ltd $8000 to produce and the 50% of the stock sold was produced in the prior year and the balance in the current year. All of the wine has been distributed to suppliers and customers as Xmas gifts and for other marketing purposes before the end of the year. However, Gino Constructions has only paid Gino Wines for $10000 of this wine.

(b)Gino Wines declared and paid a $100000 dividend during the year.

(c)Gino is by far the largest shareholder in Landstock Pty Ltd, with the other 50% of shares being spread between 10 other unrelated shareholders, many of whom are foreigners and play no part in the decision making of the organisation. The company is currently run by an employed CEO who also has a 10% stake in the company. Gino’s shares were acquired from another overseas shareholder who was looking to liquidate his Australian assets.

(d)On 1 July 2015, all identifiable assets & liabilities were recorded at fair value except their business premises where the fair value was $150000 greater than cost. The NCI fair value was $3m. Landstock’s equity at the date of acquisition consisted of Share capital of $4m and Retained earnings of $1m.

Explanation / Answer

1 As in the above mentioned case gino acquired only 50% holding,which is less than to make an entity subsidiary i.e. 51%. So gino need not to include landstock pty ltd in his consolidated group. Date Accounts Debit Credit 1) Gino construction $             15,000 Sales $          15,000 2) Bank $             10,000 Discount $               5,000 Gino construction $          15,000 3) Dividend $           100,000 Bank $        100,000 4) Business premises $           150,000 Revaluation $        150,000

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