Cena Ltd purchased 75% of the capital of Lesnar Ltd for $250 000 on 1 July 2003. At this date the equity of Lesnar Ltd was:
| Share capital | $ 100 000 | |
| General reserve | 60 000 | |
| Retained earnings | 40 000 |
At this date, Lesnar Ltd had not recorded any goodwill, and all identifiable assets and liabilities were recorded at fair value except for the following assets:
| Carrying amount | Fair value | |
| Inventory | $ 70 000 | $ 100 000 |
| Plant (cost $170 000) | 150 000 | 190 000 |
| Land | 50 000 | 100 000 |
The plant has a remaining useful life of 10 years. As a result of an impairment test, all goodwill was written off in 2006. All the inventory on hand at 1 July 2003 was sold by 30 June 2004. Differences between carrying amounts and fair values are recognised on consolidation. The tax rate is 30%.
During the 2003-2004 period, Lesnar Ltd sold a quantity of inventory to Cena Ltd for $10 000. The original cost of these items to Lesnar Ltd was $7000. One-third of this inventory was still on hand at the end of the year.
On 1 January 2004, Lesnar Ltd transferred an item of plant with a carrying amount of $15000 to Cena Ltd for $20 000. Cena Ltd treated this item as inventory. The item was still on hand at the end of the year. Lesnar Ltd applied a 20% depreciation rate to this type of plant.
The trial balances of Cena Ltd and Lesnar Ltd at 30 June 2009 are:
| Cena Ltd | Lesnar Ltd | |
| Shares in Lesnar Ltd | $ 250 000 | |
| Plant | 425 500 | $ 190 000 |
| Land | 110 000 | 50 000 |
| Current assets | 162 000 | 84 000 |
| Cost of sales | 225 000 | 35 000 |
| Other expenses | 65 000 | 7 000 |
| Income tax expense | 50 000 | 5 000 |
| $1 287 500 | $371 000 |
| Share capital | $ 400 000 | $ 100 000 |
| General reserve | 60 000 | 80 000 |
| Retained earnings (1/7/08) | 120 000 | 75 000 |
| Sales revenue | 510 600 | 80 000 |
| Payables | 72 900 | 12 000 |
| Accumulated depreciation (plant) |
124 000 | 24 000 |
| $1 287 500 | $371 000 |
Required:
Prepare the consolidation worksheet journal entries for Cena Ltd at 30 June 2004. Assume a profit for Lesnar Ltd for the 2003-04 period of $40 000.
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