Q8 Consolidation 20 Points The following information is relevant to questions 8.1, 8.2, 8.3, and 8.4. On 1 July 2017, Beach Boyz Ltd acquired 90% of the shares of McCartney & Friends Ltd for $650,000. On 1 July 2017, the equity of McCartney & Friends Ltd consisted of Share capital General reserve Retained earnings $501,000 50,000 100,000 All the identifiable assets and liabilities of McCartney & Friends Ltd were recorded at fair value on 1 July 2017 except for: Carrying amount Fair value Inventories $ 50,000 Studio and equipment (cost $600,000) $300,000 $ 60,000 $360,000 The above Studio and equipment had a further 4-year life and was expected to be used evenly over that time. During the year ended 30 June 2018, all inventories on hand at 1 July 2017 were sold. During the year ended 30 June 2018, McCartney & Friends Ltd had transferred $5,000 to General Reserve from pre-acquisition retained earnings. On 1 January 2021, McCartney & Friends Ltd sold a Tour bus to Beach Boyz Ltd for a before-tax profit of $30,000. This tour bus was carried at $225,000 (original cost $300,000) in the books of McCartney & Friends Ltd at the time of sale. Depreciation on this type of tour bus is On 1 January 2021, McCartney & Friends Ltd sold a Tour bus to Beach Boyz Ltd for a before-tax profit of $30,000. This tour bus was carried at $225,000 (original cost $300,000) in the books of McCartney & Friends Ltd at the time of sale. Depreciation on this type of tour bus is calculated using a 25% p.a. straight-line method. During the 2020-21 period, McCartney & Friends Ltd sold inventory to Beach Boyz Ltd costing $40,000 for $60,000 At 30 June 2020, 20% of these inventories were still held by Beach Boyz Ltd. McCartney & Friends Ltd paid dividends of $40,000 for the period ended 30 June 2020. The General Reserve balances on 30 June 2020 was as follows: Beach Boyz Ltd McCartney & Friends Ltd $250,000 100,000 Beach Boyz Ltd uses the partial goodwill method. Corporate tax rate of 30% applies, where applicable. Financial information for the year ended 30 June 2021 includes the following: Beach Boyz Ltd McCartney & Friends Ltd $600,000 $500,000 36,000 50,000 586,000 220,000 30,000 10.000 640,000 180,000 Sales revenue Dividend revenue Gain on sale of motor vehicle Other revenue Total revenue Cost of sales Other expenses Selling and administrative expenses (including depreciation) Financial expenses Total expenses Profit before tax Income tax expense Profit after tax Retained earnings 1 July 2020 126,000 70,000 346,000 240,000 (80,000) 160,000 210,000 370,000 (100,000) 270,000 250.000 390,000 (117,000) 273,000 200,000 740,000 (40,000) 700,000 Dividends paid Retained earnings 30 June 2021 Q8.1 2 Points Calculate Goodwill or Gain on Bargain purchase that Beach Boyz Ltd needs to recognise in the above acquisition. Show your workings. Q8.2 5 Points For the year ended 30 June 2021, prepare the Business Combination Valuation Reserve (BCVR) entries and the Pre-acquisition Elimination entries. Please select file(s) Select file(s) Q8.3 7 Points For the year ended 30 June 2021, prepare the NCI entries (a) at the date of acquisition; (b) from the date of acquisition to the beginning of current period: (c) for the current period. Please select file(s) Select file(s) Q8.4 6 Points For the year ended 30 June 2021, prepare the consolidation entries related to intragroup transactions (including any necessary entries to account for NCI effects). Please select file(s) Select file(s) Q8 Consolidation 20 Points The following information is relevant to questions 8.1, 8.2, 8.3, and 8.4. On 1 July 2017, Beach Boyz Ltd acquired 90% of the shares of McCartney & Friends Ltd for $650,000. On 1 July 2017, the equity of McCartney & Friends Ltd consisted of Share capital General reserve Retained earnings $501,000 50,000 100,000 All the identifiable assets and liabilities of McCartney & Friends Ltd were recorded at fair value on 1 July 2017 except for: Carrying amount Fair value Inventories $ 50,000 Studio and equipment (cost $600,000) $300,000 $ 60,000 $360,000 The above Studio and equipment had a further 4-year life and was expected to be used evenly over that time. During the year ended 30 June 2018, all inventories on hand at 1 July 2017 were sold. During the year ended 30 June 2018, McCartney & Friends Ltd had transferred $5,000 to General Reserve from pre-acquisition retained earnings. On 1 January 2021, McCartney & Friends Ltd sold a Tour bus to Beach Boyz Ltd for a before-tax profit of $30,000. This tour bus was carried at $225,000 (original cost $300,000) in the books of McCartney & Friends Ltd at the time of sale. Depreciation on this type of tour bus is On 1 January 2021, McCartney & Friends Ltd sold a Tour bus to Beach Boyz Ltd for a before-tax profit of $30,000. This tour bus was carried at $225,000 (original cost $300,000) in the books of McCartney & Friends Ltd at the time of sale. Depreciation on this type of tour bus is calculated using a 25% p.a. straight-line method. During the 2020-21 period, McCartney & Friends Ltd sold inventory to Beach Boyz Ltd costing $40,000 for $60,000 At 30 June 2020, 20% of these inventories were still held by Beach Boyz Ltd. McCartney & Friends Ltd paid dividends of $40,000 for the period ended 30 June 2020. The General Reserve balances on 30 June 2020 was as follows: Beach Boyz Ltd McCartney & Friends Ltd $250,000 100,000 Beach Boyz Ltd uses the partial goodwill method. Corporate tax rate of 30% applies, where applicable. Financial information for the year ended 30 June 2021 includes the following: Beach Boyz Ltd McCartney & Friends Ltd $600,000 $500,000 36,000 50,000 586,000 220,000 30,000 10.000 640,000 180,000 Sales revenue Dividend revenue Gain on sale of motor vehicle Other revenue Total revenue Cost of sales Other expenses Selling and administrative expenses (including depreciation) Financial expenses Total expenses Profit before tax Income tax expense Profit after tax Retained earnings 1 July 2020 126,000 70,000 346,000 240,000 (80,000) 160,000 210,000 370,000 (100,000) 270,000 250.000 390,000 (117,000) 273,000 200,000 740,000 (40,000) 700,000 Dividends paid Retained earnings 30 June 2021 Q8.1 2 Points Calculate Goodwill or Gain on Bargain purchase that Beach Boyz Ltd needs to recognise in the above acquisition. Show your workings. Q8.2 5 Points For the year ended 30 June 2021, prepare the Business Combination Valuation Reserve (BCVR) entries and the Pre-acquisition Elimination entries. Please select file(s) Select file(s) Q8.3 7 Points For the year ended 30 June 2021, prepare the NCI entries (a) at the date of acquisition; (b) from the date of acquisition to the beginning of current period: (c) for the current period. Please select file(s) Select file(s) Q8.4 6 Points For the year ended 30 June 2021, prepare the consolidation entries related to intragroup transactions (including any necessary entries to account for NCI effects). Please select file(s) Select file(s)