NON-CONTROLLING INTERESTS (30 marks) Fish Ltd operates a seafood distribution network in Sydney. On 1 July 2015. Fish Ltd acquired 85% of the issued shares of Monger Ltd for $520,000, paid in cash. The reported shareholders equity of Monger Ltd at the date of acquisition consisted of $275,000 in share capital and $98,000 in retained earnings. The pre- acquisition equity of Monger Ltd represented the fair values of all recorded assets and liabilities, except for inventory and a delivery truck. Fish Ltd assessed the inventory of Monger Ltd as being undervalued by $45,000. The delivery truck with an original cost of $100,000 and accumulated depreciation of $50,000 was assessed as having a fair value of $85,000 and a remaining useful life of seven years. Additional information: 1. The undervalued inventory of Monger Ltd at the date of acquisition was all sold by 30 June 2016 2. On 1 July 2016, Monger Ltd sold equipment to Fish Ltd for $84,000 when its carrying amount was S66,000 (cost is $135,000). The equipment had a 6-year remaining useful life. 3. During the year ended 30 June 2020, Monger Ltd sold inventory with an original cost of $58,000 to Fish Ltd for $85,000. On 30 June 2020, 70% of the inventory were still on hand and were subsequently sold in the following year 4. During the year ended 30 June 2021, Monger Ltd sold inventory to Fish Ltd for $102,000. The original cost of the inventory was $78,000. By 30 June 2021, Fish Ltd only managed to sell 40% of the inventory to external customers 5. The applicable tax rate is 30%. 6. Extracts from the financial statements of Monger Ltd at 30 June 2021 show the following: Profit before tax $108.000 Less: income tax expense 32.400 Profit for the year $75,600 Add: retained earnings at 1 July 2020 236,000 Less: dividends paid 40.000 Retained earnings at 30 June 2021 $271.600 Share capital General reserve $275,000 $90,000 The following acquisition analysis and consolidation adjusting entries had been prepared by the Fish Ltd group for the financial year ended 30 June 2021. You can assume they are correct OTSITION $520,000 ACQUISITION ANALYSIS: Fair value of purchase consideration Less: FVINA Share capital Retained earnings Fair value adjustment $275.000 98.000 56.000 $429,000 X 85% Acquired 85% Goodwill (364.650) $155.350 To adjust for depreciation on sale of equipment (8): Dr Accumulated depreciation Cr Depreciation expense Cr Retained earnings - op. bal. 15.000 3,000 12.000 Tax effect (9): Dr Income tax expense Dr Retained earnings - op. bal. Cr Deferred tax asset 900 3.600 4,500 To adjust for unrealised profits in opening inventory (10): Dr Retained earnings - op. bal. Cr COGS 18,900 18.900 Tax effect (11) Dr Income tax expense Cr Retained earnings - op. bal. 5.670 5.670 To adjust for unrealised profits in closing inventory (12): Dr Sales revenue Cr COGS Cr Inventory 102,000 87,600 14,400 Tax effect (13): Dr Deferred tax asset 4,320 To adjust for unrealised profits in opening inventory revy. Dr Retained earnings - op. bal. Cr COGS 18,900 18,900 5,670 Tax effect (11): Dr Income tax expense Cr Retained earnings - op. bal. 5,670 102,000 To adjust for unrealised profits in closing inventory (12): Dr Sales revenue Cr COGS Cr Inventory 87,600 14,400 Tax effect (13): Dr Deferred tax asset Cr Income tax expense 4.320 4,320 To adjust for the dividend paid by the subsidiary (14): Dr Dividend revenue Cr Dividend paid 34,000 34,000 Required: A. Prepare the NCI memorandum of profit for the Fish Ltd group for the year ended 30 June 2021. (10 marks) B. Prepare the NCI memorandum of equity for the Fish Ltd group as at 30 June 2021. (15 marks) C. Given that the fair value of the 15% non-controlling interest in Monger Ltd on 1 July 2015 was $87,000, calculate the amount of goodwill attributable to the NCI if the full goodwill method was used. Show all your workings