Question 2: On 1 February 2019, Alice Corporation was registered and offered 80 900 ordinary shares to the public at an issue price of $4, payable as follows $3 on application (due 15 March) $1 on final call By 15 March, applications had been received for 80 000 ordinary shares. The company issued 80 000 shares on 20 April. The call was made on 2 june with money due by 10 June. All money was received on the due date except for the holder of 10 000 shares who failed to meet the final call. On 15 June, as provided for in the constitution, the directors decided to forfeit these shares They were reissued, on 25 June, as paid to $4 for $3 in cash. Further issue cost is $5 060 paid in cash on 28 June. The balance of the Forfeited Shares account was returned to the former shareholder on 29 June. Required: Prepare the journal entries to record the transactions of Alice Corporation up to and including that which took place on 29 June 2019 (Show all workings and dates but narrations are NOT required). (Total 25 marks) Question 3: 3.1 The information below relates to Davis Lid and Benson Led. On 1 July 2018, Davis Ltd acquired all of the issued shares of Benson Lid for $690 006. At the acquisition date the equity of Benson Ltd consisted of: Share capital $270 000 Reserves 230 000 Retained earnings 160 000 At the date of acquisition this equity reflected the fair values of all the identifiable assets and liabilities of Benson Ltd with the exception of Inventory which had a fair value $6 000 greater than its carrying amount. The corporate tax rate is 30% Page 3 of 5Required: (a) Analyse the situation and prepare the 30 June 2019 consolidation journal entries (with narrations) relevant to the above transactions and events that the parent (15 marks) should do. (6)On 30 June 2019, the drafted individual financial statements of both companies are given as below. Based on the adjustment entries you have provided, complete the consolidation worksheet for 30 June 2019 provided below. (21 marks) NOTE TO STUDENTS: PLEASE FILL IN THIS WORKSHEET ON THIS QUESTION PAPER. Adjustments NOW Benson Ref Group Davis Ltd Ltd DR CR 1 500 000 420 000 Sales revenue Cost of goods sold 450 000 120 000 Gross profit 1 050 000 300 000 Other expenses 100 000 50 000 Profit before tax 950 000 250 000 Income tax expenses 300 000 80 000 Net profit after tax 650 000 170 000 Opening retained 390 000 160 000 earnings Closing retained earnings 1 040 000 330 000 Share capital 620 000 270 000 Reserves 190 500 230 000 Business Combination Valuation Reserve Payables 410 000 220 000 Deferred tax liabilities 250 500 10 000 Cash 2 511 000 1 060 000 799 000 Inventory 455 000 165 000 Deferred tax assets 70 000 Land 27 000 20 000 Investments (including 670 000 515 000 investment in Benson Ltd.) 850 000 Goodwill amount (carrying 2 511 000 1 060 000 Page 4 of 53.2 Hedley Lid acquired all shares in Byrne Led on 1 June 2016. During the your ending 30 June 2019, Hedley Led sold inventory to Byrne Lid for $78 904 The inventory had cost Hedley Led $34 000. By the 090. By the end of the year ending 30 June 2919. Byrne Ltd had sold three quarters of the inventory to Channel Led and the company one quarter of the inventory was still held by Byrne Lad. Assume corporate tax rate is 30%. Required: For the purposes of consolidated financial statements, discuss the reasons as to gu need for the adjustment journal entries for the above intra-group transactions between the two entities and prepare the consolidation journal entries for the above trans (7 marks) (Total 43 marks) Question 4: 4.1 What is meant by the term "non-controlling interest" (NCI) and where can NCI be presented on the consolidated balance sheet? (3 marks) 4.2 If a step approach is used in the calculation of the NCI share of equity, what are the steps involved? (3 marks) 4.3 According to AASB 10 Consolidated Financial Statements, for control to be deemed to exist, all three elements listed below, must be present: power over the investee. - exposure, or rights, to variable returns from its involvement with the investre. - the ability to use its power over the investee to affect the amount of the investor's returns. (3 marks) Required: Briefly explain these three elements. (Total 9 marks)