Part A

(a) There is one asset that appears in the consolidated balance sheet of the group but probably does not appear in the parent entitys or subsidiary entitys separate financial statements, and there is also one asset that will appear in the balance sheet of the parent entity but will not appear in the consolidated financial statements. Name these two assets.

(b) What is the primary criterion for determining whether or not to consolidate an entity?

Part B

Parent Ltd acquired equity in Subsidiary Ltd on 1 April 2009. At that date the identifiable net assets were considered to be fairly valued and the equity of Subsidiary Ltd comprised:

Share capital	$100,000
Retained earnings	30,000

Nine years later Parent Ltd is preparing consolidated financial statements for the financial year ended 31 March 2018 and has gathered the following information:

• Prior years impairment of total goodwill amounted to $26,000. For the current year ended 31 March 2018 the directors of Parent Ltd believe that the total goodwill has been further impaired by $4,000.

• During the financial year ended 31 March 2017 Subsidiary Ltd made sales to Parent Ltd of $30,000 and recorded a profit of $5,000. Parent Ltd had not sold this purchase of inventory as at 31 March 2017.

• During the financial year ended 31 March 2018 Parent Ltd made sales to Subsidiary Ltd of $7,000 and recorded a profit of $3,200. This purchase remained in the inventory of Subsidiary Ltd as at 31 March 2018.

• Subsidiary Ltd billed Parent Ltd $2,100 for consulting advice provided on 25 March 2018. This transaction had been recorded by both entities; it remained unpaid as at 31 March 2018.

• The following account balances have been extracted from the financial statements of Subsidiary Ltd at 31 March 2018:

	$
Profit after tax	60,000
Retained earnings-opening balance	40,000
Dividends declared	15,000
Retained earningsclosing balance	85,000
Share capital	100,000

Required:

(a) Assume Parent Ltd acquired 80% of the equity in Subsidiary Ltd for $160,000 on

1 April 2009. Complete the consolidation worksheet in the answer book for Parent Ltd for the financial year ended 31 March 2018 in accordance with NZ IFRS 10 and NZ IFRS 3. The directors of Parent Ltd require the non-controlling interest to be measured at fair value. Other relevant information about intercompany transactions are provided in the consolidation worksheet.

Note: You are required to include your notional journal entries, with workings, in the answer booklet.

(b) Paragraph 19 of NZ IFRS 3 Business Combinations requires the acquirer to measure the non-controlling interest (NCI) in the acquiree at either fair value (FV) or the NCIs proportionate share in the recognised amounts of the acquirees identifiable net assets (INA).

Start with your answer for (a) and reconcile to the NCI measured at the NCIs proportionate share in the recognised amounts of the acquirees INA.

(c) Prove your reconciliation in (b) above by preparing the the notional journal entry at

31 March 2018 to identify the non-controlling interest (NCI), in Subsidiary Ltd, to be reported in the group accounts in accordance with NZ IFRS 10 Consolidated Financial Statements and NZ IFRS 3 Business Combinations. The NCI is to be measured at the NCIs proportionate share in the recognised amounts of the acquirees INA.

Note: Your workings must be included on each line of your notional journal entry.

Please solve this whole problem. Thanks