On 1 July 20X6, Parent Ltd acquired 70 per cent of the share capital of Subsidiary Ltd for $400,000, which represented the fair value of the consideration paid, when the share capital and reserves of Subsidiary Ltd were:

Share capital $350,000

Revaluation surplus $100,000

Retained earnings $50,000

$500,000

All assets of Subsidiary Ltd were recorded at fair value at acquisition date.

Required:

1. Prepare the consolidation elimination and adjustment entries to recognise the pre-acquisition capital and reserves of Subsidiary Ltd, assuming that the non-controlling interest was measured at the proportionate share of the acquirees identifiable net assets (partial goodwill method). (9 marks)
2. Where only a proportion of a subsidiarys shares are owned by a parent entity, what proportion of the intragroup transactions between the parent entity and the subsidiary will need to be eliminated on consolidation? (1 mark)