Question
Juan Ltd acquired 80 percent share capital of Beach Ltd. On 1 July 2018 for a cost of $500,000. As at the date of acquisition,
Juan Ltd acquired 80 percent share capital of Beach Ltd. On 1 July 2018 for a cost of $500,000. As at the date of acquisition, all assets and liabilities of Beach Ltd fairly valued except a land that has a carrying value $50,000 less than the fair value. The recorded balance of equity of Beach Ltd as at 1 July 2018 were as: Share capital $350,000 Retained earnings $100,000 Total $450,000 Additional information: ? The management of Juan Ltd values non-controlling interest at the proportionate share of Beach Ltd identifiable net assets ? Beach Ltd has a profit after tax of $70000 for the year ended 30 June 2019 ? During the financial year to 30 June 2019, Beach Ltd sold inventory to Juan Ltd for a price of $60000. The inventory costs Beach Ltd $30000 to produce. 25 percent of the inventory are still on the hand of Juan Ltd as at 30 June 2019. ? During the year Beach Ltd paid $10000 in management fees to Juan Ltd. ? On 1 July 2018, Beach Ltd sold an item of plant to Juan Ltd $40000. The equipment had a carrying value of $30000 (Cost $50000, accumulated depreciation $20000). At the date of sale it was expected that the equipment had a remaining life of 4 years and no residual value. ? The tax rate is 30 percent. Required: (a) Based on the above information, calculate the non-controlling interest as at 30 June 2019. (7 marks) (b) Pass necessary journal entry to recognise the non-controlling interest as at 30 June 2019. (5 marks)
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