Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

QUESTION 3 - Consolidation: Direct and Indirect NCI (20 Marks) On 1 January 2018, Shoe Ltd acquired 80% of the voting shares (and control) of

image text in transcribed

QUESTION 3 - Consolidation: Direct and Indirect NCI (20 Marks) On 1 January 2018, Shoe Ltd acquired 80% of the voting shares (and control) of Sock Ltd and 30% of the voting shares of Foot Ltd. On the same day, Sock Ltd acquired 60% of the voting shares (and control) of Foot Ltd. The Shoe Group is considered a reporting entity. Profits and dividends paid/declared by group entities for the year ended 31 December 2019 were as follows: Shoe Ltd Sock Ltd Foot Ltd $ $ $ Profit after tax 2,000,000 1,200,000 1,000,000 Interim dividend paid 400,000 300,000 200,000 Final dividend declared 800,000 400,000 300,000 Additional Information: During the year ended 31 December 2018, Foot Ltd sold goods to Shoe Ltd for $450,000. These goods cost Foot Ltd $300,000. 40% of these goods remained in Shoe Ltd's inventory at 31 December 2018. Remaining of these goods were sold externally as at 31 December 2019. During the year ended 31 December 2018, Shoe Ltd sold goods to Sock Ltd for $150,000. These goods cost Shoe Ltd $100,000. 50% of these goods remained in Sock Ltd's inventory at 31 December 2018. Remaining of these goods were sold externally as at 31 December 2019. During the year ended 31 December 2019 Foot Ltd sold goods to Sock Ltd for $90,000. These goods cost Foot Ltd $40,000. 80% of these goods remained in Sock Ltd's inventory at 31 December 2019. All entities in the group use the perpetual inventory system. The corporate tax rate is 30%. All group entities recognise dividend revenue when dividends are declared. Required: On the basis of the information provided, calculate the total non-controlling interest in consolidated profit after tax for year ended 31 December 2019. Show all workings. (Journal entries are NOT required.) QUESTION 3 - Consolidation: Direct and Indirect NCI (20 Marks) On 1 January 2018, Shoe Ltd acquired 80% of the voting shares (and control) of Sock Ltd and 30% of the voting shares of Foot Ltd. On the same day, Sock Ltd acquired 60% of the voting shares (and control) of Foot Ltd. The Shoe Group is considered a reporting entity. Profits and dividends paid/declared by group entities for the year ended 31 December 2019 were as follows: Shoe Ltd Sock Ltd Foot Ltd $ $ $ Profit after tax 2,000,000 1,200,000 1,000,000 Interim dividend paid 400,000 300,000 200,000 Final dividend declared 800,000 400,000 300,000 Additional Information: During the year ended 31 December 2018, Foot Ltd sold goods to Shoe Ltd for $450,000. These goods cost Foot Ltd $300,000. 40% of these goods remained in Shoe Ltd's inventory at 31 December 2018. Remaining of these goods were sold externally as at 31 December 2019. During the year ended 31 December 2018, Shoe Ltd sold goods to Sock Ltd for $150,000. These goods cost Shoe Ltd $100,000. 50% of these goods remained in Sock Ltd's inventory at 31 December 2018. Remaining of these goods were sold externally as at 31 December 2019. During the year ended 31 December 2019 Foot Ltd sold goods to Sock Ltd for $90,000. These goods cost Foot Ltd $40,000. 80% of these goods remained in Sock Ltd's inventory at 31 December 2019. All entities in the group use the perpetual inventory system. The corporate tax rate is 30%. All group entities recognise dividend revenue when dividends are declared. Required: On the basis of the information provided, calculate the total non-controlling interest in consolidated profit after tax for year ended 31 December 2019. Show all workings. (Journal entries are NOT required.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Michelle Hanlon, Robert Magee, Glenn Pfeiffer, Thomas Dyckman

5th Edition

1618531654, 9781618531650

More Books

Students also viewed these Accounting questions

Question

4 What is the recruitment phase?

Answered: 1 week ago