Consolidation

The following financial statements of Tina Ltd and its subsidiary Jane Ltd have been extracted from their financial records at 30 June 2020. Tina Ltd Jane Ltd Reconciliation of operating profit and closing retained earnings Sales revenue 671400 540000 Cost of goods sold (464000) (238000) Gross profit 207400 302000 Dividends received from Jane Ltd 93000 - Management fee revenue 26500 Gain on sale of plant 40000 35000 Expenses Administrative expenses (30800) (38700) Depreciation (29500) (56800) Management fee expense - (26500) Other expenses (101100) (72000) Profit before tax 205500 143000 Tax expense (61500) (42200) Profit for the year 144000 100800 Retained earnings 30 June 2019 319400 239200 463400 340000 Dividends paid (137400) (93000) Retained earnings 30 June 2020 326000 247000 Tina Ltd Jane Ltd Statement of financial position Shareholders’ equity Retained earnings 314683 247000 Share capital 350000 200000 Current liabilities Accounts payable 54700 46300 Tax payable 41300 25000 Non-current liabilities Loans 173500 116000 945500 634300 Current assets Accounts receivable 49400 62300 Inventory 92000 29000 Non-current assets Land and Buildings 224000 326000 Plant – at cost 299850 355800 Accumulated depreciation (85705) (138800) Investment in Jane Ltd 356000 - 945500 634300 Other information a) Tina Ltd acquired its 100 per cent interest in Jane Ltd on 1 July 2015, that is, five years earlier. At that date the capital and reserves of Jane Ltd were: Share capital $200,000 Retained earnings 180,000 $380,000 At the date of acquisition all assets were considered to be fairly valued. b) During the year Tina Ltd made total sales to Jane Ltd of $60,000. c) The closing inventory in Tina Ltd includes inventory acquired from Jane Ltd at a cost of $33,000. This cost Jane Ltd $28,000 to produce. d) Jane Ltd sold $50,000 in inventory to Tina Ltd. e) The closing inventory of Jane Ltd includes inventory acquired from Tina Ltd at a cost of $12,000. This cost Tina Ltd $10,000 to produce. f) The opening inventory in Tina Ltd as at 1 July 2019 included inventory acquired from Jane Ltd for $40,000 that cost Jane Ltd $30,000 to produce. g) On 1 July 2019 Jane Ltd sold an item of plant to Tina Ltd for $116,000 when its carrying value in Jane Ltd’s accounts was $81,000 (cost $135,000, accumulated depreciation $54,000). This plant is assessed as having a remaining useful life of six years. The group has a policy of measuring its property, plant and equipment using the cost model. The group uses the straight-line method of depreciation. h) Jane Ltd paid $26,500 in management fees to Tina Ltd i) The tax rate is 30 per cent.