Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

P Ltd paid $500 million to acquire 90% of S Ltd on 31 December 20x8 when S Ltd's net assets were represented by share capital

P Ltd paid $500 million to acquire 90% of S Ltd on 31 December 20x8 when S Ltd's net assets were represented by share capital of $100 million and retained profits of $100 million. On this date, S Ltd's land which was carried in its statement of financial position at $500 million had a market value of $600 million. S Ltd's share capital comprised 100 million shares which are traded on 31 December 20x8 at a market value of $4.50 per share. The group policy was to measure its non-controlling interest based on its acquisition-date fair value. For 20x8 consolidation, the consolidation journal entry for "Non-controlling interest" should be:

  1. Dr Share capital $10 million, Dr Beginning retained profit $10 million, Dr Goodwill $23 million, Cr Non-controlling interest $43 million.
  2. Dr Share capital $10 million, Dr Beginning retained profit $10 million, Dr Land $10 million, Cr Non-controlling interest $30 million.
  3. None of the listed choices.
  4. Dr Share capital $10 million, Dr Beginning retained profit $10 million, Dr Land $10 million, Dr Goodwill $15 million, Cr Non-controlling interest $45 million.
  5. Dr Share capital $10 million, Dr Beginning retained profit $10 million, Cr Non-controlling interest $20 million.

Which option is it?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Davis, Charles E., Elizabeth

1st Edition

0471699608, 978-0471699606

More Books

Students also viewed these Accounting questions