On 1 July 2017, London Ltd acquired all of the shares of Whale Ltd, on a cum-div. basis, for

$2,700,000. At this date, the equity and liability sections of Whale Ltd.s statement of financial position showedthe following balances:

Share capital	$ 1,150,000
General reserve	400,000
Retained earnings	920,000
Revaluation surplus	100,000
Dividend payable	25,000

At 1 July 2017, Whale Ltd.s assets included $46,000 of recorded goodwill. The dividend payable atacquisition date was subsequently paid in August 2017.

At acquisition date, all the identifiable assets and liabilities of Whale Ltd were recorded at amounts equal to fair value except for the following:

	Carrying amount	Fair value
Land	$450 000	$520 000
Inventory	49 000	55 000
Plant (cost $400 000)	320 000	360 000

The inventory on hand in Whale Ltd at 1 July 2017 was sold in November 2017. The plant was estimatedto have a further 5-year life with zero residual value. On 1 January 2019, the plant was sold to Bruno Ltd for $230,000. On 30 June 2018, goodwill was impaired by $4 500. The company applies the partial goodwill method. Tax rate is 30%.

During the period 1 July 2017 to 30 June 2019, the following intragroup transactions have occurredbetween London Ltd and Whale Ltd:

(T1) On 1 October 2018, London Ltd provided a $500,000 loan to Whale Ltd. The interest rate on this loan is 10% p.a., and interest is paid each year on 30 March. At 30 June 2019, no principal repayments havebeen made on the loan.

(T2) In April 2018, London Ltd sold inventory to Whale Ltd for $1,300. The inventory had previously cost London Ltd $800. By 30 June 2018, 80% of this inventory had been sold to Scarf Ltd for $1,500. Theremainder of the inventory was sold to Fluffy Jacket Ltd in August 2018 for $1,600.

(T3) On 3 June 2019, Whale Ltd sold inventory to London Ltd for $42,000. The transfer price included amark-up of 20% on cost. At 30 June 2019, one-half of this inventory was still on hand.

(T4) On 1 March 2019, Whale Ltd sold equipment to London Ltd for $55 000, this asset having a carryingamount at the time of sale of $46,000. Whale Ltd had treated the asset as a depreciable non-currentasset, being depreciated at 15% on cost, whereas London Ltd records the equipment as inventory. London Ltd sold this asset to Beanie Ltd on 15 June 2019 for $61,500.

(T5) On 1 January 2018, London Ltd sold machinery to Whale Ltd for $66,000. The machinery had a writtendown value at the time of sale of $45,000. For this type of machinery, both entities charge depreciationat a rate of 20% p.a. straight-line.

Required:

Q1 Show the pre-acquisition analysis on 1 July 2017.

Q2 Prepare the BCVR entries on 30 June 2019. If BCVR entries are not necessary for a certain BCVR asset, please indicate it clearly and explain why BCVR entries are not necessary (You need to discuss more than simply saying as it was sold in the previous year).

Q3 Prepare the pre-acquisition entries on 30 June 2019.

Q4 Prepare the intragroup transaction adjustment entries on 30 June 2019.

Q5 Now assume that the parent acquired 75% (rather than 100%) of the shares of the subsidiary and paid $2,000,000 (rather than $2,700,000). Solve the following two questions under this new assumption.

1. Provide the pre-acquisition analysis on 1 July 2017.

2. Suppose that the BCVR land is still on hand of the subsidiary on 30 June 2020. The following NCI journal entries are made for the calculation of the NCI share of equity on 30 June 2020. The amounts for each account are not provided for the sake of simplicity.

Share capital Dr XXX

General reserve Dr XXX

Revaluation surplus Dr XXX

RE (op) Dr XXX

OPAT Dr XXX

BCVR Dr XXX

NCI Cr XXX

Now, if the BCVR land is sold during the fiscal year ended on 30 June 2020 (rather than still on hand), what changes will need to be made to the NCI journal entries shown above? Explain the changes and provide reasons for them.