Question 1 continued:

Part C

Parent Ltd acquired equity in Subsidiary Ltd on 1 April 2008. At that date, the identifiable net assets were considered to be fairly valued, and the equity of Subsidiary Ltd comprised:

Share capital	$370 000
Retained earnings	190 000
Asset revaluation surplus	35 000
	$ 595 000

Parent Ltd requested your help in the preparation of their consolidated financial statements for the financial year ended 31 March 2023 and has provided you with the following information:

• In 2010 the total goodwill of Subsidiary Ltd was considered by the directors to be impaired by $ 3 200 and then again in 2019 by $3 000. The directors of Parent Ltd believe that the total goodwill has been further impaired, during this financial year ended 31 March 2023, by $2 000.

• Subsidiary Ltd borrowed $70 000 from Parent Ltd on 8 August 2021 at an interest rate of 4.5% per annum; the loan is repayable in 2024. Subsidiary Ltd paid the interest expense for the year ended 31 March 2023 on 31 March 2023.

• During March 2022, Subsidiary Ltd made sales to Parent Ltd of $8 000 and recognised a profit of $3 000. Parent Ltd had not sold this purchase of inventory as at 31 March 2022.

• During March 2023, Subsidiary Ltd made sales to Parent Ltd of $7 800 and recognised a profit of $2 900. Parent Ltd's inventory on hand on 31 March 2023 included this purchase from Subsidiary Ltd.

Required:

(a) Assume Parent Ltd acquired 100% of the equity in Subsidiary Ltd on 1 April 2008. Complete the consolidation worksheet, in the examination answer booklet, for Parent Ltd for the financial year ended 31 March 2023 in accordance with NZ IFRS 10 Consolidated Financial Statements and NZ IFRS 3 Business Combinations. Note: Space for notional journal entries has been provided in the answer booklet. The notional journal entries must be prepared, but will not be marked.

(b) Assume Parent Ltd only acquired 60% of the equity in Subsidiary Ltd for $372 000 on 1 April 2008.

Prepare the notional journal entry at 31 March 2023 to identify the non-controlling interest (NCI), in Subsidiary Ltd to be reported in the group accounts in accordance with NZ IFRS 10 Consolidated Financial Statements and NZ IFRS 3 Business Combinations. The directors of Parent Ltd require the NCI in Subsidiary Ltd to be measured at fair value. Where will you include this NCI account in the Consolidated Statement of Financial Performance?

QUESTION 2

The 2022 Financial Results/Report for Air NZ and Auckland Airport are provided on Canvas/Modules/Assignments 1 to 5. Answer the questions in the answer booklet; all questions relate to 2022.

QUESTION 3

Determine the amount of goodwill for (a) and (b) in the answer booklet.

use the below booklet:

Question 1 continued: Part C (a) Consolidation Worksheet for Parent Ltd for the financial year ended 31 March 2023
	Parent Ltd	Sub Ltd	Notional Journal Entries	Group
Income statement/dividend items:	$	$	$ Dr	$Cr	$
Income (Including interest income and dividend income)	1 290 000	823 685
Less expenses (Including COGS and interest expense)	890 238	619 046
Profit before tax	399 762	204 639
Less income tax expense	145 780	115 059
Profit after tax	253 982	89 580
Retained earnings opening bal	145 324	196 000
Less: dividends declared	110 000	74 000
Balance Sheet items:
Retained earnings closing bal	289 306	211 580
Asset revaluation surplus	-	36 000
Share capital	500 000	370 000
Total equity	$789 306	$617 580
Dividend payable to Parent Ltd	-	30 000
Various liabilities	456 624	250 400
Loan payable to Parent Ltd	-	70 000
Total liabilities	456 624	350 400
Total equity and liabilities	$1 245 930	$967 980			$
Inventory	82 000	53 600
Dividend receivable	30 000	-
Various other assets	443 930	914 380
Loan receivable from Sub Ltd	70 000	-
Investment in Sub Ltd	620 000	-
Total assets	$1 245 930	$967 980			$

Question 1 Part C continued:

Workings for Part C (a) Notional Journal Entries Note: These notional journal entries will not be marked, but you are required to provide them.
		$ Dr	$ Cr
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)

Question 1 Part C continued:

Part C (b) Notional journal entry, on 31 March 2023, for the NCI measured at FV. Workings must be shown.
31/03/23	$	$

Where will you include this NCI account in the Consolidated Statement of Financial Performance?

Answer:

QUESTION 2

	Air NZ	Auckland Airport
1. Is the entity a parent?
2. Is there any NCI?
3. Within the Statement of Accounting Policies, there is one for the Basis of consolidation. Within this policy, find the answers to the following:
(a) State the page number where you saw this policy.
(b)The consolidated financial statements are accounted for using which method?
(c) What is done with the material intercompany transactions?

QUESTION 3

	$ FV of net assets:	$ Unrecognised Intangible assets	$ BV of net assets:	$ FV of the identified net assets (INA):	$ Contingent liability	$ 100% of the Goodwill would be?	$ Cash consideration for 80% of the Subs equity:
(a)	900 000	75 000	600 000	952 000	23 000		800 000
(b)	2 100 000	-	2 500 000