Princeton Ltd is a manufacturer of necklaces and Stanford Ltd is a manufacturer of

scarves. In anticipation of high revenue growth rate of Standford Ltd

$,$

$$on

$1$

$$January

$2$

$0$

$2$

$3$

$,$

$$Princeton Ltd acquired

$7$

$0$

$\%$

$$of the shares of Standford Ltd by paying $

$6$

$7$

$,$

$6$

$0$

$0$

$$

cash to Standford Ltd

$.$

$$The fair value of the non

$-$

controlling interests was $

$2$

$7$

$,$

$2$

$0$

$0$

$$on

the acquisition day. The followings reflect the financial performance and financial

position of both companies on

$3$

$1$

$$December

$2$

$0$

$2$

$3$

$.$

Income Statement for the year ended

$3$

$1$

$$December

$2$

$0$

$2$

$3$

Princeton Standford

Ltd Ltd

$ $

Sales

$4$

$0$

$,$

$7$

$2$

$0$

$1$

$9$

$,$

$5$

$1$

$4$

Cost of sales

$($

$5$

$,$

$3$

$8$

$0$

$)$

$($

$2$

$,$

$5$

$9$

$2$

$)$

Gross profit

$3$

$5$

$,$

$3$

$4$

$0$

$1$

$6$

$,$

$9$

$2$

$2$

Other expenses

$($

$3$

$,$

$9$

$3$

$0$

$)$

$($

$1$

$,$

$7$

$4$

$0$

$)$

Operating profit

$3$

$1$

$,$

$4$

$1$

$0$

$1$

$5$

$,$

$1$

$8$

$2$

Dividend income from Standford Ltd

$1$

$9$

$6$

Profit before tax

$3$

$1$

$,$

$6$

$0$

$6$

$1$

$5$

$,$

$1$

$8$

$2$

Tax expense

$($

$6$

$,$

$2$

$8$

$2$

$)$

$($

$3$

$,$

$0$

$3$

$6$

$)$

Profit after tax

$2$

$5$

$,$

$3$

$2$

$4$

$1$

$2$

$,$

$1$

$4$

$6$

Dividends declared

$($

$6$

$0$

$0$

$)$

$($

$2$

$8$

$0$

$)$

Profit retained

$2$

$4$

$,$

$7$

$2$

$4$

$1$

$1$

$,$

$8$

$6$

$6$

Retained earnings on

$1$

$$Janaurary

$1$

$6$

$,$

$8$

$5$

$6$

$1$

$0$

$,$

$2$

$0$

$0$

Retained earnings on

$3$

$1$

$$December

$4$

$1$

$,$

$5$

$8$

$0$

$2$

$2$

$,$

$0$

$6$

$6$

$3$

Additional Information:

$1$

$)$

$$The equity balance of Standford Ltd on the acquisition day consisted of share capital

of $

$5$

$0$

$,$

$0$

$0$

$0$

$$and retained earnings of $

$1$

$0$

$,$

$2$

$0$

$0$

$.$

$$

$2$

$)$

$$The accountant of Princeton Ltd found that, on

$1$

$$January

$2$

$0$

$2$

$3$

$,$

$$there was an

in

$-$

process research and development project undertaken by the Standford Ltd and the

$$cost incurred under this project was $

$1$

$8$

$,$

$0$

$0$

$0$

$.$

$$This amount was recognized as an

$$expense in the financial statement of Standford Ltd

$.$

$$However$,$ the accountant judged

$$that this project had met the definition of an intangible asset. The remaining useful

life of this intangible asset was

$1$

$0$

$$years from the acquisition day.

$3$

$)$

$$On the acquisition day, Princeton Ltd asked a professional to revalue the net assets

of Standford Ltd

$.$

$$It was found that the fair value of the net assets was equal to

$$their book value EXCEPT that there should be a fair value increase of the factory

$$building by $

$2$

$6$

$,$

$0$

$0$

$0$

$$and an impairment loss of the accounts receivable by $

$1$

$,$

$0$

$0$

$0$

$.$

The remaining useful life of this factory building was

$2$

$0$

$$years from the date of

$$acquisition$.$

Statement of Financial Position as at

$3$

$1$

$$December

$2$

$0$

$2$

$3$

Princeton Standford

Ltd Ltd

$ $

Assets

Property, plant and equipment

$1$

$2$

$4$

$,$

$0$

$0$

$0$

$6$

$4$

$,$

$0$

$0$

$0$

Investment in Standford Ltd

$6$

$7$

$,$

$6$

$0$

$0$

$-$

Inventories

$1$

$8$

$,$

$5$

$6$

$0$

$9$

$,$

$5$

$2$

$0$

Account receivables

$1$

$6$

$,$

$3$

$0$

$0$

$6$

$,$

$4$

$6$

$0$

Cash

$4$

$,$

$7$

$0$

$0$

$2$

$,$

$4$

$0$

$0$

$$

$2$

$3$

$1$

$,$

$1$

$6$

$0$

$8$

$2$

$,$

$3$

$8$

$0$

Equity and Liabilities

Share capital

$1$

$7$

$2$

$,$

$0$

$0$

$0$

$5$

$0$

$,$

$0$

$0$

$0$

Retained earnings

$4$

$1$

$,$

$5$

$8$

$0$

$2$

$2$

$,$

$0$

$6$

$6$

Non

$-$

current liabilities

$1$

$0$

$,$

$5$

$6$

$0$

$6$

$,$

$4$

$5$

$4$

Current liabilities

$7$

$,$

$0$

$2$

$0$

$3$

$,$

$8$

$6$

$0$

$$

$2$

$3$

$1$

$,$

$1$

$6$

$0$

$8$

$2$

$,$

$3$

$8$

$0$

$4$

$4$

$)$

$$Three months before the acquisition, several workers of Standford Ltd were injured

$$owing to the unsafe working condition in one of the production lines. Accordingly,

$$these workers took legal action against the company for claiming damages. As of

$$

$3$

$1$

$$December

$2$

$0$

$2$

$2$

$,$

$$the verdict for this legal case was still pending and the company

$$

s

$$experienced lawyer opined that the outcome was not probable based on the following

$$estimations:

$$Probability Damages to be paid within

$1$

$$year

$$Win the lawsuit

$0$

$.$

$7$

$$Nil

$$Lose the lawsuit

$0$

$.$

$3$

$$$

$5$

$8$

$,$

$0$

$0$

$0$

$$Therefore$,$ on

$3$

$1$

$$December

$2$

$0$

$2$

$2$

$,$

$$the above event was disclosed as a contingent

$$liability in the notes to financial statements of Standford Ltd

$.$

$5$

$)$

$$The accounting policy of Princeton Ltd requires that the measurement of NCI on

$$the acquisition day should be based on fair value approach.

$6$

$)$

$$Tax rate is

$2$

$0$

$\%$

$.$

$$

Required:

$($

All figures should be rounded to zero decimal place.

$)$

$1$

$.$

$$Based on the relevant International Financial Reporting Standard, prepare the

following consolidation journal entries for the year ended

$3$

$1$

$$December