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. Grals - Additional information: Male Cider Goal 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 $66,000 (cost is $135,000). The equipment had a 6-year remaining useful life. 3. During the year ended 30 June 2020, Monger Lid 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 Lid 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 ORA show ute 100 WIB $108.000 32,400 Profit before tax Less: income tax expense Profit for the year Add: retained eamings at 1 July 2020 Less: dividends paid Retained eamings at 30 June 2021 $75,600 236,000 40,000 $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. ACQUISITION ANALYSIS arch OR ACQUISITION ANALYSIS Fair value of purchase consideration Less: FVINA $520,000 Share capital Retained earnings Fair value adjustment $275.000 98,000 36.000 $429,000 X 85% Acquired 85% Goodwill (364,650) $155.350 CONSOLIDATION ADJUSTING ENTRIES Debits Credits To eliminate the investment asset against the subsidiary's pre-acquisition equity (1); Dr Share capital 237,750 Dr Retained eaming 83.300 Dr Fair vahe adjustment 47.600 Dr Goodwill 135.350 Cr Investment in subsidiary 320,000 To record fair value adjustment of inventory (2): Dr Retained eamings - op, bal. Ct Fair value adjustment 31,500 here to 31,500 To record fair value adjustment of truck (3): Dr Accumulated depreciation Cr Delivery truck Cr Fair value adjustment Ct Deferred tax liability 50,000 15,000 24,500 10,500 To adjust for depreciation of truck (4): Dt Depreciation expense Dr Retained eamings - op, bal Cr Accumulated depreciation 5,000 25,000 30,000 Tar effect (5); De Deferred tax liability a lacome tax expense CrRetained earnings op. bal. 9,000 1,500 To eliminate unrealised gain on sale of equipment (6): Dr Retained eamings - op. bal De Equipment Ct Accumulated depreciation 7,500 18,000 51,000 her to see 69,000 Business mal be Hill Olident Gout. Tax effect (7): Dr Deferred tax asset ar Retained earnings op. bal 5.400 5,400 To adjust for depreciation on sale of equipment (8): Dr Accumulated depreciation a Depreciation expense CrRetained eaming - op. bal 15,000 3,000 12.000 Tuxellect (9): Di lancome tax expense Di Retained eamings - op., bal . C Defened tax asset 900 3.600 To adjust for un realised profits in opening inventory (10): Dr Retained eamings - op. bal COOGS 4.500 18.900 Tur effect (11): De Income tax expense Ct Retained eamings - op, bal 18.900 5,670 OBODOC 5,670 To adjust for unrealised profits in opening inventory (10): Dr Retained eamings - op, bal CCOGS 18,900 18.900 Tax effect (11); De Income tax expense Ct Retained earnings - op. bal 5,670 5,670 To adjust for unrealised profits in closing inventory (12): Dr Sales revenue CICOGS Cr Inventory 102,000 87,600 14,400 Tut effect (13) Dr Deferred tax asset Cr Income tax expense 4,320 4,320 To adjust for the dividend paid by the subsidiary (14): De Dividend revenue Cr Dividend paid 34,000 her to search 34,000 Required: A. Prepare the NCl 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 NC if the full goodwill method was used. Show all your workings. (5 marks) 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. Grals - Additional information: Male Cider Goal 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 $66,000 (cost is $135,000). The equipment had a 6-year remaining useful life. 3. During the year ended 30 June 2020, Monger Lid 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 Lid 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 ORA show ute 100 WIB $108.000 32,400 Profit before tax Less: income tax expense Profit for the year Add: retained eamings at 1 July 2020 Less: dividends paid Retained eamings at 30 June 2021 $75,600 236,000 40,000 $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. ACQUISITION ANALYSIS arch OR ACQUISITION ANALYSIS Fair value of purchase consideration Less: FVINA $520,000 Share capital Retained earnings Fair value adjustment $275.000 98,000 36.000 $429,000 X 85% Acquired 85% Goodwill (364,650) $155.350 CONSOLIDATION ADJUSTING ENTRIES Debits Credits To eliminate the investment asset against the subsidiary's pre-acquisition equity (1); Dr Share capital 237,750 Dr Retained eaming 83.300 Dr Fair vahe adjustment 47.600 Dr Goodwill 135.350 Cr Investment in subsidiary 320,000 To record fair value adjustment of inventory (2): Dr Retained eamings - op, bal. Ct Fair value adjustment 31,500 here to 31,500 To record fair value adjustment of truck (3): Dr Accumulated depreciation Cr Delivery truck Cr Fair value adjustment Ct Deferred tax liability 50,000 15,000 24,500 10,500 To adjust for depreciation of truck (4): Dt Depreciation expense Dr Retained eamings - op, bal Cr Accumulated depreciation 5,000 25,000 30,000 Tar effect (5); De Deferred tax liability a lacome tax expense CrRetained earnings op. bal. 9,000 1,500 To eliminate unrealised gain on sale of equipment (6): Dr Retained eamings - op. bal De Equipment Ct Accumulated depreciation 7,500 18,000 51,000 her to see 69,000 Business mal be Hill Olident Gout. Tax effect (7): Dr Deferred tax asset ar Retained earnings op. bal 5.400 5,400 To adjust for depreciation on sale of equipment (8): Dr Accumulated depreciation a Depreciation expense CrRetained eaming - op. bal 15,000 3,000 12.000 Tuxellect (9): Di lancome tax expense Di Retained eamings - op., bal . C Defened tax asset 900 3.600 To adjust for un realised profits in opening inventory (10): Dr Retained eamings - op. bal COOGS 4.500 18.900 Tur effect (11): De Income tax expense Ct Retained eamings - op, bal 18.900 5,670 OBODOC 5,670 To adjust for unrealised profits in opening inventory (10): Dr Retained eamings - op, bal CCOGS 18,900 18.900 Tax effect (11); De Income tax expense Ct Retained earnings - op. bal 5,670 5,670 To adjust for unrealised profits in closing inventory (12): Dr Sales revenue CICOGS Cr Inventory 102,000 87,600 14,400 Tut effect (13) Dr Deferred tax asset Cr Income tax expense 4,320 4,320 To adjust for the dividend paid by the subsidiary (14): De Dividend revenue Cr Dividend paid 34,000 her to search 34,000 Required: A. Prepare the NCl 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 NC if the full goodwill method was used. Show all your workings