Plant and equipment Investment property In-process R&D Accounts receivable Cash Accounts payable Contingent liabilities Share capital Retained earnings page 220 PROBLEMS P4.1 Goodwill fair value adjustments P Co issued 2,000,000 of its own shares (fair value of $10 per share) and paid $6,000,000 in cash to the existing owners of S Co to acquire 90% of the shares of S Co on 1 July 20x1. Fair value of non-controlling interests was $2,800,000 at the date of acquisition. The book and fair values of S Cos assets and liabilities as at 1 July 20x1 are shown below: Book value Fair value . . . . . . . . . . . . . . . . . . $ 2,000,000 $ 1,800,000 . . . . . . . . . . . . . . . . . . . 10,000,000 15,000,000 . . . . . . . . . . . . . . . . . . . . . . 0 6,000,000 Inventory 500,000 750,000 . . . . . . . . . . . . . . . . . . . 200,000 200,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 10,000 $12,710,000 $23,760,000 . . . . . . . . . . . . . . . . . . . . $ 1,510,000 $ 1,510,000 . . . . . . . . . . . . . . . . . . . 90,000 . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 . . . . . . . . . . . . . . . . . . . . 1,200,000 $12,710,000 Additional information: (a)The remaining useful life of plant and equipment as at 1 July 20x1 was ten years. (b)As at 30 June 20x2, the fair value of in-process R&D was reliably assessed at $5,500,000. (c)90% of the inventory was sold by 30 June 20x2 and the balance 10% was deemed as impaired on 30 June 20x3. (d)The fair value model is to be adopted for investment property in the consolidated financial statements, that is, changes in fair value after initial recognition are taken to the income statement. As at 30 June 20x2, the fair value of the investment property was $16,000,000. S Co incorrectly applied the cost model (without depreciation) to measure the investment property in its separate financial statements. (e)As at 30 June 20x2, no recognition was made for contingent liabilities in the separate financial statements of S Co. However, a disclosure was made in the footnotes of S Co in relation to the contingent liabilities. As at 30 June 20x2, the reported amount of the contingent liabilities was deemed reliable and met the recognition criteria in IFRS 3. (f)Approximately 10% of entity goodwill was deemed to be impaired as of 30 June 20x2. (g)Tax rate is 20%. Recognize tax effects on fair value adjustments. (h)S Co earned annual profit after tax of $2,000,000 for the year ended 30 June 20x2 and 30 June 20x3. There were no dividends or other changes in equity during the two years. There was no change in the fair value of investment property as at 30 June 20x3. Required: Share capital Retained earnings Shareholders equity Fixed assets, cost Less accumulated depreciation Net book value Other assets, net of liabilities Net assets page 221 Sales Cost of sales Gross profit Other expenses Operating profit Dividend income from Silver Ltd Profit before tax Tax expense Profit after tax 1. Show the consolidation adjustments for P Co and its subsidiary S Co for the years ended 30 June 20x2 and 30 June 20x3. 2. Perform an analytical check on the balance of non-controlling interests as at 30 June 20x2 and 30 June 20x3.

Additional information: (a) The remaining useful life of plant and equipment as at 1 July 20x1 was ten years. (b) As at 30 June 20x2, the fair value of in-process R\&D was reliably assessed at $5,500,000. (c) 90% of the inventory was sold by 30 June 20x2 and the balance 10% was deemed as impaired on 30 June 203. (d) The fair value model is to be adopted for investment property in the consolidated financial statementsege 220 that is, changes in fair value after initial recognition are taken to the income statement. As at 30 June 202, the fair value of the investment property was $16,000,000. S Co incorrectly applied the cost model (without depreciation) to measure the investment property in its separate financial statements. (e) As at 30 June 20x2, no recognition was made for contingent liabilities in the separate financial statements of S Co. However, a disclosure was made in the footnotes of S Co in relation to the contingent liabilities. As at 30 June 20x2, the reported amount of the contingent liabilities was deemed reliable and met the recognition criteria in IFRS 3. (f) Approximately 10% of entity goodwill was deemed to be impaired as of 30 June 202. (g) Tax rate is 20%. Recognize tax effects on fair value adjustments. (h) S Co earned annual profit after tax of $2,000,000 for the year ended 30 June 20x2 and 30 June 20x3. There were no dividends or other changes in equity during the two years. There was no change in the fair value of investment property as at 30 June 203. 1. Show the consolidation adjustments for P Co and its subsidiary S Co for the years ended 30 June 20x2 and 30 June 20x3. 2. Perform an analytical check on the balance of non-controlling interests as at 30 June 202 and 30 June 203. P4.1 Goodwill fair value adjustments P Co issued 2,000,000 of its own shares (fair value of $10 per share) and paid $6,000,000 in cash to the existing owners of S Co to acquire 90% of the shares of S Co on 1 July 201. Fair value of non-controlling interests was $2,800,000 at the date of acquisition. The book and fair values of S Co's assets and liabilities as at 1 July 20x1 are shown below: Additional information: (a) The remaining useful life of plant and equipment as at 1 July 20x1 was ten years. (b) As at 30 June 20x2, the fair value of in-process R\&D was reliably assessed at $5,500,000. (c) 90% of the inventory was sold by 30 June 20x2 and the balance 10% was deemed as impaired on 30 June 203. (d) The fair value model is to be adopted for investment property in the consolidated financial statementsege 220 that is, changes in fair value after initial recognition are taken to the income statement. As at 30 June 202, the fair value of the investment property was $16,000,000. S Co incorrectly applied the cost model (without depreciation) to measure the investment property in its separate financial statements. (e) As at 30 June 20x2, no recognition was made for contingent liabilities in the separate financial statements of S Co. However, a disclosure was made in the footnotes of S Co in relation to the contingent liabilities. As at 30 June 20x2, the reported amount of the contingent liabilities was deemed reliable and met the recognition criteria in IFRS 3. (f) Approximately 10% of entity goodwill was deemed to be impaired as of 30 June 202. (g) Tax rate is 20%. Recognize tax effects on fair value adjustments. (h) S Co earned annual profit after tax of $2,000,000 for the year ended 30 June 20x2 and 30 June 20x3. There were no dividends or other changes in equity during the two years. There was no change in the fair value of investment property as at 30 June 203. 1. Show the consolidation adjustments for P Co and its subsidiary S Co for the years ended 30 June 20x2 and 30 June 20x3. 2. Perform an analytical check on the balance of non-controlling interests as at 30 June 202 and 30 June 203. P4.1 Goodwill fair value adjustments P Co issued 2,000,000 of its own shares (fair value of $10 per share) and paid $6,000,000 in cash to the existing owners of S Co to acquire 90% of the shares of S Co on 1 July 201. Fair value of non-controlling interests was $2,800,000 at the date of acquisition. The book and fair values of S Co's assets and liabilities as at 1 July 20x1 are shown below