Question - Investor prepares consolidated financial statements, multiple periods
On 1 July 2014, Harp Ltd purchased 30% of the shares of Lyre Ltd for $60 050. At this date, the ledger balances of Lyre Ltd were:
|
Capital
|
$150 000
|
Assets
|
$225 000
|
|
Other reserves
|
30 000
|
Less: Liabilities
|
(30 000)
|
|
Retained earnings
|
15 000
|
|
|
|
$195 000
|
|
$ 195 000
|
At 1 July 2014, all the identifiable assets and liabilities of Lyre Ltd were recorded at fair value except for plant whose fair value was $5000 greater than carrying amount. This plant has an expected future life of 5 years, the benefits being received evenly over this period. Dividend revenue is recognised when dividends are declared. The tax rate is 30%.
The results of Lyre Ltd for the next 3 years were:
|
Profit/(loss) before income tax
|
$50 000
|
$40 000
|
$(5 000)
|
|
Income tax expense
|
(20 000)
|
(20 000)
|
-
|
|
Profit/(loss)
|
30 000
|
20 000
|
(5 000)
|
|
Dividend paid
|
15 000
|
5 000
|
2 000
|
|
Dividend declared
|
10 000
|
5 000
|
1 000
|
Required - Prepare, in journal entry format, for the years ending 30 June 2015, 2016 and 2017, the consolidation worksheet adjustments to include the equity-accounted results for the associate, Lyre Ltd, in the consolidated financial statements of Harp Ltd.