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Full Ltd acquired 80% of the share capital of Partial Ltd on 1 July 2011 for $350 000, when all assets of Partial Ltd were
Full Ltd acquired 80% of the share capital of Partial Ltd on 1 July 2011 for $350 000, when all assets of Partial Ltd were fairly valued.
Additional information:
- Share capital and reserves are:
At 1 July 2015 At 1 July 2020
Share Capital $200 000 $200 000
Retained earnings $175 000 $425 000
No intragroup transactions took place between 1 July 2015 and 30 June 2019.
- The only intragroup transaction for the year ending 30 June 2020, was Full Ltd sold inventory to Partial Ltd for a price of $120,000. The inventory cost Full Ltd $90,000 to produce. At 30 June 2020, Partial Ltd still had 75% of this inventory on hand, but by 30 June 2021, all of this inventory had been sold to external parties.
- During the financial year ending 30 June 2021, Partial Ltd sold inventory to Full Ltd for a price of $240,000. The inventory cost Partial Ltd $160 000 to produce. By 30 June 2021, Full Ltd had sold 40% of this inventory to external parties.
- At 1 January 2021, Full Ltd sold an item of plant to Partial Ltd, making a profit on the sale of $10,000. At the date of sale, the plant had accumulated depreciation of $25 000 and a remaining life of 4 years.
- For the year ending 30 June 2021, Full Ltd declared and paid $30 000 in dividends, while Partial Ltd declared and paid dividends of $20 000.
- Full Ltd measures any NCI using the fair value (ie full goodwill) method.
The tax rate is 30 per cent.
Required:
- Identify the three steps of the NCI calculation:
- Not enough information is provided in this question to complete one of these steps.
- Which step cannot be completed?
- What other information do you require?
- Calculate goodwill on acquisition and prepare all consolidation/elimination journals for the year ending 30 June 2021 for items 1 to 6 only. Narrations are required on all journals. Journals must be presented in a professional manner, and numbered with a reference corresponding to the item of additional information it relates to.
- Assume Full Ltd measures any NCI at the NCIs proportionate share of Partial Ltds identifiable net assets.
- Which of the 3 steps of the NCI calculation will this alter?
- Which journal number (from part c) will this alter?
- Calculate goodwill on acquisition and provide the updated journal assuming the proportionate share of Partial Ltds identifiable net assets is applied
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