QUESTION 2-Consolidation: Direct and Indirect NCI 10 MARKS On 1 January 2015, Rock Ltd acquired 80 % of the voting shares of Paper Ltd and 25% of the voting shares of Scissors Ltd. On the same day, Paper Ltd acquired 65% of the voting shares in Scissors Ltd. Profit and dividends paid/declared by group entities for the financial year ended 31 December 2016 were as follows: Paper Ltd $ 1,150,000 Scissors Ltd Rock Ltd $ 1,800,000 Details Profit after tax Interim dividend paid Final dividend declared 870,000 200,000 150,000 300,000 300,000 250,000 850,000 Additional Information: (a) During the financial year ended 31 December 2015, Rock Ltd sold goods to Paper Ltd for $240,000. These goods cost Rock Ltd $200,000. At 31 December 2015 60% of these goods remained in Paper Ltd's inventory (b) During the financial year ended 31 December 2015, Paper Ltd sold goods to Scissors Ltd for $100,000. These goods cost Paper Ltd $75,000. At 31 December 2015, 80% of these goods remained in Scissors Ltd's inventory. (c) During the financial year ended 31 December 2016, Scissors Ltd sold goods to Paper Ltd for $80,000. These goods cost Scissors Ltd $60,000. At 31 December 2016, 60% of these goods remained in Paper Ltd's inventory. (d) All entities in the group use the perpetual inventory system. Dividend revenue is recognised by entities when the dividend has been declared (e) (f) The corporate tax rate is 30%. Required: Based on the inform ation provided, prepare a NCI Memorandum Account to calculate the total non-controlling interest in consolidated profit after tax for the year ended 31 December 2016. Show all workings. Journal entries are not required. QUESTION 2-Consolidation: Direct and Indirect NCI 10 MARKS On 1 January 2015, Rock Ltd acquired 80 % of the voting shares of Paper Ltd and 25% of the voting shares of Scissors Ltd. On the same day, Paper Ltd acquired 65% of the voting shares in Scissors Ltd. Profit and dividends paid/declared by group entities for the financial year ended 31 December 2016 were as follows: Paper Ltd $ 1,150,000 Scissors Ltd Rock Ltd $ 1,800,000 Details Profit after tax Interim dividend paid Final dividend declared 870,000 200,000 150,000 300,000 300,000 250,000 850,000 Additional Information: (a) During the financial year ended 31 December 2015, Rock Ltd sold goods to Paper Ltd for $240,000. These goods cost Rock Ltd $200,000. At 31 December 2015 60% of these goods remained in Paper Ltd's inventory (b) During the financial year ended 31 December 2015, Paper Ltd sold goods to Scissors Ltd for $100,000. These goods cost Paper Ltd $75,000. At 31 December 2015, 80% of these goods remained in Scissors Ltd's inventory. (c) During the financial year ended 31 December 2016, Scissors Ltd sold goods to Paper Ltd for $80,000. These goods cost Scissors Ltd $60,000. At 31 December 2016, 60% of these goods remained in Paper Ltd's inventory. (d) All entities in the group use the perpetual inventory system. Dividend revenue is recognised by entities when the dividend has been declared (e) (f) The corporate tax rate is 30%. Required: Based on the inform ation provided, prepare a NCI Memorandum Account to calculate the total non-controlling interest in consolidated profit after tax for the year ended 31 December 2016. Show all workings. Journal entries are not required
