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
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.  

Click on Buy Solution and make payment. All prices shown above are in USD. Payment supported in all currencies. Price shown above includes the solution of all questions mentioned on this page. Please note that our prices are fixed (do not bargain).

After making payment, solution is sent within 2 to 5 minutes on your Email ID. But it may take up to 1 hour in case of high load on server. Solution is available in Word or Excel format unless otherwise specified.


If your question is slightly different from the above question, please contact us at info@myassignmentguru.com with your version of question.