(2) Based on the information provided, using the proportionate goodwill method, show all the

consolidation journal entries, including all related tax effects, and NCI journal entries required

upon consolidation as at 30 June 2017.

Include all narrations.

Show all workings. Where workings are not shown, part marks will not be awarded.

On 1 July 2014, Parent Ltd acquired 65% of the issued shares of Sub Ltd paying $5,130,000 in cash. The separate accounting records of Sub Ltd at 1 July 2014 include the following equity balances: Issued capital: General reserve: Retained earnings: $3,500,000 $1,000,000 $2,200,000 At the date of acquisition, all assets of Sub Ltd were carried in their accounting records at fair value except for land which had a carrying amount of $384,000. The land had a fair value of $540,000. Sub Ltd chose to continue to record the asset under the cost model. The tax rate is 30%. The land has not been sold by the end of the reporting period. The summarised financial statements of the entities as at 30 June 2017 is as follows: Parent Ltd Sub Ltd $ S Operating profit after tax Retained earnings 1/7/16 Available for appropriation Final dividend paid Retained earnings 30/6/17 Issued capital General reserve Total Equity Liabilities (including DTLs) 680,000 3,220,000 3,900,000 -500.000 3,400,000 7,000,000 2,000,000 12,400,000 1,730,000 780,000 2.300,000 3,080,000 0 3,080,000 3,500,000 1,300,000 7,880,000 620,000 Total Equities and Liabilities 14,130,000 8,500,000 Land 4,700,000 1,700,000 Investment in Sub Ltd 5,130,000 0 Other assets (including DTAs) Total Assets 4,300,000 14,130,000 6,800,000 8,500,000