Page 29 - PowerPoint Presentation

CONSOLIDATIONS AFTER THE DATE OF ACQUISITION

Example - depreciable PPE (source : UNISA 3 rd Yr Tut)

• 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.

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