You are the accountant for Butcher Limited. Butcher Limited purchasedall the equity of Fruit Limited on 1 July 2020. At that time the carrying value of the net assets of Fruit Ltd was $1 500 000. This amount was made up in equity as follows: share capital $1 000 000; retained earnings $500 000. During the period ended 30 June 2021, Fruit Limited sold inventory that cost $450 000 for $620 000 to Butcher Limited. Twenty per cent of this inventory remains on hand in Butcher Limited at the end of the year. Both companies use a perpetual inventory system. The taxation rate is 30%. At the end of the period Fruit Limited declared a dividend of $45 000 that has not yet been paid. Goodwill has been determined to have been impaired by $20 000 during the period.
As the accountant you are required to prepare the elimination entries to reflect the purchase of Fruit Limited, including the intra-group transactions as at 30 June 2021. (Business Combination Valuation Reserve and dates not required)
