Lion Ltd is an international company resident in Singapore

Lion Ltd is an international company resident in Singapore. It acquired the issued shares of an Australian company, Koala Ltd, on 1 July 2016 for a $700,000.   At 30 June 2017, the following information was available about the two companies.   Lion Ltd Koala Ltd S$ A$ Share capital      560,000      350,000 Retained earnings as at 1/7/16      330,000      170,000 Provisions         45,000         30,000 Payables         14,000         40,000 Sales      620,000      310,000 Dividend revenue           6,400                  – Accumulated depreciation – plant      210,000      160,000   1,785,400   1,060,000 Cash         92,100         30,000 Accounts receivable      145,300      115,000 Inventories      110,000         80,000 Shares in Koala Ltd      336,000                  – Buildings…

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On 1 July 2015, Investor Ltd acquired 25% of the shares of Investee Ltd for $42,500

On 1 July 2015, Investor Ltd acquired 25% of the shares of Investee Ltd for $42,500. At this date, all the identifiable assets and liabilities of Investee Ltd were recorded at amounts equal to fair value, and the equity of Investee Ltd consisted of:

 

Share capital $100,000
General reserve 30,000
Asset revaluation surplus 20,000
Retained earnings 20,000

 

During The 2015–16 year, Investee Ltd reported a profit of $25,000. As reported in other comprehensive income, the asset revaluation surplus increased by $5,000. Investee Ltd paid a $4,000 dividend and transferred $3,000 to general reserve.

 

Required:

 

Prepare the equity accounting journal entries at 1 July 2016 assuming that Investor does not prepare consolidated financial statements.

Canberra Ltd, an Australian company, acquired all the issued shares of Washington Ltd

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