Bell Limited ("Bell") owns 75% of the voting shares of Log Limited ("Log") and has control over Log. For the current year ended 31 March 2020, the following intra-group transaction occurred: On 1 November 2019, Log Limited issued 2,500 8% debentures of $100 at nominal value. Bell Limited acquired 30% of these debentures on the issuance date. Interest is payable half-yearly on 30 June and 31 December. Accruals have been recognized in the legal entities' accounts. Bell also owns 25% of Bronze Limited ("Bronze"). Bell has demonstrated significant influence in the financial and operating policy decisions of Bronze but not control or joint control over the company. On 1 April 2019, Bronze sold an item of plant to Bell for $24,000. At the date of transfer, the carrying amount of this plant in Bronze's records was $15,000. The plant has a remaining useful life of 5 years. Bronze's net profit for the year ended 31 March 2020 is $44,000. Required: (a) Prepare all necessary consolidation adjusting entries as at 31 March 2020 in relation to the intragroup transaction. (b) Compute Bell's share of Bronze's profit for the year ended 31 March 2020.

Bell Limited ("Bell") owns 75% of the voting shares of Log Limited ("Log") and has control over Log. For the current year ended 31 March 2020, the following intra-group transaction occurred: On 1 November 2019, Log Limited issued 2,500 8% debentures of $100 at nominal value. Bell Limited acquired 30% of these debentures on the issuance date. Interest is payable half-yearly on 30 June and 31 December. Accruals have been recognized in the legal entities' accounts. Bell also owns 25% of Bronze Limited ("Bronze"). Bell has demonstrated significant influence in the financial and operating policy decisions of Bronze but not control or joint control over the company. On 1 April 2019, Bronze sold an item of plant to Bell for $24,000. At the date of transfer, the carrying amount of this plant in Bronze's records was $15,000. The plant has a remaining useful life of 5 years. Bronze's net profit for the year ended 31 March 2020 is $44,000. Required: (a) Prepare all necessary consolidation adjusting entries as at 31 March 2020 in relation to the intragroup transaction. (b) Compute Bell's share of Bronze's profit for the year ended 31 March 2020.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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