Consolidation: non-controlling interest (NCI) Partial goodwill method ** Question : 4. Prepare the consolidation worksheet entries at 30 June 2019. Assume a profit for Carl Ltd for the year ended 30 June 2019 of $61,400

Steps: 1. Prepare the acquisition analysis at acquisition date.(please refer to below) 2. Prepare the business combination valuation entries and pre-acquisition entry at acquisition date.(please refer to below) 3. Prepare the journal entry to recognize NCI at acquisition date.(please refer to below)

Laura Ltd purchased 97% of the issued shares of Chris Ltd for $1,759,000 on 1 July 2018 when the equity of Chris Ltd was as follows;

Share capital	$703,600
Asset Revaluation surplus	$527,700
Retained earnings	$263,850

At this date, Chris Ltd had not recorded any goodwill, and all identifiable assets and liabilities were recorded at fair value except for the followings;

Account	Cost	Carrying Amount	Fair value	Further Life (Years)
Inventories		$52,800	$58,100
Land		$132,000	$145,000
Equipment	$205,000	$164,000	$197,000	8
Chris Ltd identified at acquisition date a contingent liability related to a lawsuit where Chris Ltd was sued by a former supplier			$21,000
Chris Ltd had unrecorded and internally generated Patent with the fair value of :			$53,000
Chris Ltd had unrecorded and internally generated in-process research and development with the fair value of :			$40,000

60% of inventory on hand at 1 July 2018 were sold by 20 June 2019. Further life of the assets is listed on the above table. Partial goodwill method is under use and the tax rate is 30%

2. Business Combination Valuation at acquisition date:

Details	Dr	Cr
Inventories (FV-CA=58,100-52,800)	5300
Deferred Tax Liability (DTL), Tax rate 30%		1590
Business Combination Valuation Reserve (BCVR) 70%		3710
Land (145,000 132,000)	13,000
DTL		3,900
BVCR		9,100
Accumulated Depreciation	41,000
Equipment		41,000
Equipment	33,000
DTL		9,900
BCVR		23,100
Patent	53,000
12DTL		15,900
BCVR		37,100
Research and development	40,000
DTL		12,000
BCVR		28,000
Deferred Tax Asset (DTA)	6,300
BCVR	14,700
Contingent Liability		21,000

Pre-acquisition entries at acquisition date:

	Dr	Cr
Share Capital	682,492
Asset Value Surplus	511,869
Retained Earning	255,934.5
BCVR (3710+9100+23,100+37,100+28,000-14,700 = 86310)	83,720.7
Goodwill	224,983.8
Shares in Carl Ltd		1,759,000

3. NCI share of equity at acquisition date:

	Dr	Cr
Share Capital	21,108
Asset Value Surplus	15,831
Retained Earning	7,915.5
BCVR	2,589.3
NCI		47,443.8