Adaris Group, headquartered in the UK, owns a 70 percent interest in Adaris Malaysia. The acquisition cost

Question:

Adaris Group, headquartered in the UK, owns a 70 percent interest in Adaris Malaysia. The acquisition cost was ₤200 million. At the date of acquisition, 1 January 2012, Adaris Malaysia's book value was ₤60 million, and its identifiable net assets were carried at amounts approximating fair value. Goodwill recognized for this acquisition was impaired by ₤20 million during the period 2012-2014. Goodwill impairment for 2015, the current year, is ₤5 million. The following information relates to intercompany transactions: 

• In 2013, Adaris sold land with a book value of ₤2 million to Adaris Malaysia for ₤3 million. Adaris Malaysia sold the land to an outside party in 2015 for ₤3.5 million. 

• Adaris sells merchandise to Adaris Malaysia at a markup of 30% on cost. Adaris Malaysia's beginning inventory contains ₤11.7 million in merchandise acquired from Adaris. Its ending inventory contains 10.4 million in merchandise acquired from Adaris. Adaris sold merchandise priced at ₤260 million to Adaris Malaysia during 2015.

• On 30 June 2012, Adaris Malaysia sold equipment with a book value of £50 million to Adaris for £65 million. The equipment had a remaining life of five years, straight-line. Adaris still holds the equipment.
It is now 31 December 2015, the end of Adaris’ accounting year. Adaris uses the complete equity method to account for its investment in Adaris Malaysia on its own books. Adaris also uses the IFRS alternative approach to valuing the noncontrolling interest in Adaris ‘Malaysia. Below are the separate trial balances of Adaris Group and Adaris Malaysia at 31 December 2015.

image text in transcribed

Required

a. Calculate Adaris Group’s equity in net income and the noncontrolling interest in net income for the current year.

b. Prepare a working paper to consolidate the trial balances of Adaris Group and Adaris Malaysia.
Label your eliminating entries (C), (I), (E), (R), (O), and (N). .

c. Present the consolidated income statement for 2015 and the consolidated balance sheet at cy December 2015.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Advanced Accounting

ISBN: 978-1618531513

3rd Edition

Authors: Susan S. Hamlen

Question Posted: