Part A

Gray Ltd acquired 85% of the issued capital of Maddix Ltd on 1 July 2019.

At acquisition date Maddix Ltds accounting records included the following balances: Share Capital $475,000, Asset Revaluation Surplus $65,000, General Reserve $125,000, and Retained Earnings $152,000. All identifiable assets and liabilities of Maddix Ltd are recorded at fair value and Gray Ltd uses the partial goodwill method.

The balance of retained earnings at 1 July 2020 is $205,000 and Maddix Ltd makes a profit after tax of $97,000 in the year ended 30 June 2021. The tax rate is 30%.

Required:

Prepare the NCI journal entries for the consolidation worksheet at 30 June 2021 demonstrating the step approach. Note: The acquisition analysis and parents journal entries are not required.

Part B

Gray Ltd acquired 85% of the issued capital of Maddix Ltd on 1 July 2019. The following transactions took place during the periods following.

1. The value of the inventory of Gray Ltd at 1 July 2020 included an intragroup profit of $62,000 as a result of purchases from Maddix Ltd. It was all sold by Gray Ltd during the year ended 30 June 2021. (5 marks)
2. Maddix Ltd declared a final dividend of $60,000 on 30 June 2021. (6 marks)

Required:

Prepare adjusting journal entries for the consolidation worksheet at 30 June 2021. The tax rate is 30%. Note: NCI allocation journals are required if necessary.