Page 22 - PowerPoint Presentation
P. 22
CONSOLIDATIONS AFTER THE DATE OF ACQUISITION
Example - Depreciable PPE
• A Ltd has held an 80% interest in B Ltd since 2012. Since this
date A Ltd has exercised control over B Ltd.
• On 31 December 2013 B Ltd sold manufacturing machinery to
A Ltd for R20 000.
• The carrying amount of the machinery in the books of B Ltd
was R15 000.
• Depreciation is provided for at 20% per annum on the straight-
line method.
• Both entity’s year-ends fall on 31 December.
• Assume a tax rate of 28%.
REQUIRED:
• Prepare the pro forma consolidation journal entries for the
years ended
• 31 December 2013 and 31 December 2014.
22
