Question $2$

RBE owns $70\%$ of the ordinary share capital of DCA. The total group equity as at $31$ December

$20$X$1$ was $$4,000,000,$ which included $$650,000$ attributable to non$-$controlling interest.

RBE purchased a further $20\%$ of the ordinary share capital of DCA on $1$ October $20$X$2$ for

$$540,000.$

During the year to $31$ December $20$X$2,$ RBE issued $2$ million $$1$ ordinary shares, fully paid, at

$$1\mathrm{.}30$ per share. Dividends were paid by both group entities in April $20$X$2.$ The dividends paid

by RBE and DCA were $$200,000$ and $$100,000,$ respectively.

Total comprehensive income for the year ended $31$ December $20$X$2$ for RBE was $$900,000$

and for DCA was $$600,000.$ Income is assumed to accrue evenly throughout the year.

Required

$($a$)$ Explain the impact of the additional $20\%$ purchase of DCA's ordinary share capital

by RBE on the equity of the RBE Group. $(10$ marks$)$

$($b$)$ Prepare the consolidated statement of changes in equity for the year ended $31$

December $20$X$2$ for the RBE Group, showing the total equity attributable to the parent

and to the non$-$controlling interest. All workings should be shown. $(15$ marks$)$

Total $25$ mark