Exercise 29.1 Full and partial goodwill method

On 1 July 2022, Rainbow Ltd acquired 80% of the issued shares of Lorikeet Ltd for $330 000. At this date, the equity of Lorikeet Ltd was as follows.

Share capital $200 000

General reserve 80 000

Retained earnings 100 000

At acquisition date, all the identifiable assets and liabilities of Lorikeet Ltd were recorded at amounts equal to fair value. At 30 June 2024, the equity of Lorikeet Ltd consisted of:

Share capital $200 000

General reserve 100 000

Retained earnings 160 000

A transfer from pre-acquisition retained earnings to general reserve of $20 000 was made during the year ended 30 June 2023. During the year ended 30 June 2024, Lorikeet Ltd recorded a profit of $30 000.

Required Prepare the consolidated worksheet entries at 30 June 2024 for Rainbow Ltd assuming:

1. At 1 July 2022, the fair value of the non-controlling interest was $80 000 and Rainbow

   Ltd adopts the full goodwill method.

2. Rainbow Ltd adopts the partial goodwill method.

(LO4)