Question

1. Prepare the consolidation journal entries for H Ltd. Use fair value approach to assess NCI.

2. Prepare a consolidated statement of financial position (balance sheet) for H Ltd as at 31 December 2020 showing the adjustment by using a worksheet.

(Please reply in details. Thank so much.)

The statement of financial position (balance sheet) of Herbert Ltd (H Ltd) and Sandy Ltd (S Ltd) as at 31 December 2020 are as shown below: H Ltd $'000 S Ltd $'000 Tangible fixed assets Land and building Plant and machinery 6,000 5,250 11.250 5,250 3,000 800 4.800 Investment in S Ltd Current assets Inventory Trade receivables Current account with S Ltd Cash 200 100 400 200 1,300 2.400 4,300 1,500 1,800 (1,600) Current liabilities Trade payables Current account with H Ltd Dividends payable (400) (800) (400) (1,000) 1,700 18,200 200 5.000 Total net assets 12,000 3,000 Share capital (12,000,000 and 3.000.000 shares issued and fully paid) Retained earnings Total equity 6,200 18,200 2.000 5,000 H Ltd acquired 70% of the share capital of S Ltd on 1 January 2018 by an exchange of one share in H Ltd plus $0.5 for every share in S Ltd when the retained earnings of S Ltd were $1,000,000. The market price of each H Ltd's share and S Ltd's share at the date of acquisition were $2 and $1.5 respectively. On 31 December 2020, S Ltd sent a cheque to H Ltd for $200,000 and also goods in of transit $300,000. Both cash and goods were not received by H Ltd until 2 January 2021 H Ltd has not included any entries in its accounts relating to the dividend receivable from S Ltd. 30% of the goodwill is to be written off as an impairment loss in 2020. (Hint: Dr. Retained earnings and Cr. Goodwill.) Required: 1 Prepare the consolidation journal entries for H Ltd. Use fair value approach to assess NCI 2 Prepare a consolidated statement of financial position (balance sheet) for H Ltd as at 31 December 2020 showing the adjustment by using a worksheet