QUESTION 1

Black Ltd acquired 70% of the share capital of Red Ltd on 1 July 2022 for a cost of $303,000. At the date of acquisition all assets were fairly valued, and the balance of share capital and reserves was as follows:

	$
Share capital	180 000
Retained earnings	50 000
Revaluation surplus	60 000
	290 000

Required:

1. Black Ltd's management want the consolidated financial statements of the group to understate assets as much as possible. Which method of accounting for NCI would you recommend Black Ltd's management choose? Why?
2. Using the method recommended above, calculate the NCI and any goodwill at the date of acquisition.

Acquisition analysis:
	Red Ltd	Black Ltd	NCI
		70% interest	30% interest
		$	$
Fair value of consideration transferred
Less: FVINA acquired:
Share capital at acquisition date
Retained earnings at acquisition date
Revaluation surplus
Goodwill at acquisition