On the 1 July 2022 Beninbra Limited acquired 60% of the shares of Indigoo Limited for $780,000. At this date the equity of Indigoo Limited consisted of the following:

	$
Share capital	900,000
General reserve	50,000

Retained earnings 195,000

At acquisition, Indigoo Limited had not recorded any goodwill, and all identifiable assets and liabilities were recorded at fair value except for the following assets:

	Carrying amount	Fair value
	$	$
Building (cost $750,000)	450,000	480,000
Plant (cost $819,000)	573,300	560,000
Land	600,000	750,000

Inventories 76,800 67,800

Additional details about the revalued assets.

The building's useful life was 20 years. The building will be depreciated on a straight-line basis over the remaining life.

The plant's original useful life was 10 years and will continue to be depreciated the same rate on a straight-line basis over the remaining useful life of 7 years.

All the inventory revalued at acquisition was on-sold in July 2022.

The financial statement information of both entities on 30 June 2023 is provided below and included in the excel file available in the I2 site.

Beninbra Ltd Indigoo Ltd

$	$
3,329,600	2,077,440
153,600	167,936
3,483,200	2,245,376
-2,100,000	-1,187,840
-876,000	-331,776
-2,976,000	-1,519,616
507,200	725,760
-76,800	-81,920

Sales revenue Other revenue Total revenue

Cost of sales

Other expenses

Total expenses

Profit before tax Tax expense

Profit for the period		430,400	643,840
Retained earnings at 1 July 2022		1,256,000	422,880
Transfer from general reserve			15,000
Dividend paid		-51,200	-30,720
Dividend declared		-76,800	-15,360

1,558,400	1,035,640
1,024,000	900,000 35,000
2,582,400	1,970,640
102,400	85,800
76,800	102,400
30,720	38,400
1,302,480	1,226,400
1,512,400	1,453,000
4,094,800	3,423,640
224,304	74,640
203,936	93,920
254,800	76,800
780,000 1,680,000	750,000
-924,000	-300,000
2,048,000	819,000
-1,392,640	-307,200
900,000	600,000
150,000	75,000
-60,000	-15,000
192,000	1,536,000
38,400	20,480
4,094,800	3,423,640

Retained earnings at 30 June 2023

Share capital

General reserve Total equity

Provisions

Payables

Deferred tax liabilities

Noncurrent liabilities

Total liabilities Total equity and liabilities

Cash

Receivables

Inventories

Shares indigoo Ltd

Building

Accumulated depreciation building

Plant

Accumulated depreciation plant

Land

Motor vehicles

Accumulated depreciation - motor vehicles

Intangible assets

Deferred tax assets

Total assets

2022-2023 events

• Indigoo Limited sold inventory to Beninbra Limited for $17,000 in May. The inventory had cost Indigoo $14,000, 20% of the inventory was still held as at 30 June 2023.
• Beninbra Limited sold inventory to Indigoo Limited for $4,000 profit In January. The inventory cost Beninbra $20,000. All the inventory has been on sold by Indigoo.
• On 30/6/2023, Indigoo Limited sold a motor vehicle that cost $60,000 for a gain of $2,000 to Beninbra Limited. The vehicle has a further useful life of 4 years and is depreciated at 20%.
• On 30 June 2023, Beninbra invoiced Indigoo Limited $50,000 for management consulting.

Beninbra did not pay the invoice until 15 July 2023.

• In January Indigoo paid its shareholders $30,720. Then in June they declared a dividend of $15,360.
• On 1 April 2023, Beninbra Limited lent $200,000 to Indigoo Limited, at an interest rate of 4% per year. Interest is payable on the last day of every quarter, starting 30 June 2023

Required

1. Use the full goodwill method to determine if there is any goodwill or gain on bargain purchase arises from the acquisition made by Beninbra Ltd. The fair value of the noncontrolling interest on 1 July 2022 was $495,719. (2 marks)
2. Use the partial goodwill method to determine if there is any goodwill or gain on bargain purchase. (2 marks)
3. Using the partial goodwill or gain on bargain purchase calculation from (b), prepare the following journal entries in relation to the preparation of the consolidated financial statements of Beninbra Ltd as at 1 July 2022:
   1. business combination valuation entries (explain/narrate your answers). (4 marks)
   2. pre-acquisition elimination entries, including workings. (1 mark)
   3. entries showing non-controlling interest's share of equity on 1 July 2021. (1 mark)
   4. Prepare the following journal entries in relation to the preparation of the consolidated financial statements of Beninbra Ltd as at 30 June 2023:
      1. Business combination valuation entries (explain/narrate your answers). (3 marks)
      2. pre-acquisition elimination entries., including workings. (1 mark)
      3. entries showing non-controlling interests' share of equity on 1 July 2022. (1 mark)
      4. entries showing non-controlling interest's share of equity from 1 July 2022 to 30 June 2023, show workings. (2 marks) 5.Intragroup elimination entries. (8 marks)
   5. Prepare the consolidation worksheet using entries from d. (5 marks)
   6. Use the consolidated worksheet from e. to prepare the following consolidated financial statements for the year ended 30 June 2023:
      1. Statement of comprehensive income. (1 mark)
      2. Statement of financial position. (3 marks)
      3. Statement of changes in equity. (1 mark)

Question 3 Consolidation with Non-controlling Interest (35 marks)

On the 1 July 2022 Beninbra Limited acquired 60% of the shares of Indigoo Limited for $780,000. At this date the equity of Indigoo Limited consisted of the following:

	$
Share capital	900,000
General reserve	50,000

Retained earnings 195,000

At acquisition, Indigoo Limited had not recorded any goodwill, and all identifiable assets and liabilities were recorded at fair value except for the following assets:

	Carrying amount	Fair value
	$	$
Building (cost $750,000)	450,000	480,000
Plant (cost $819,000)	573,300	560,000
Land	600,000	750,000

Inventories 76,800 67,800

Additional details about the revalued assets.

The building's useful life was 20 years. The building will be depreciated on a straight-line basis over the remaining life.

The plant's original useful life was 10 years and will continue to be depreciated the same rate on a straight-line basis over the remaining useful life of 7 years.

All the inventory revalued at acquisition was on-sold in July 2022.

The financial statement information of both entities on 30 June 2023 is provided below and included in the excel file available in the I2 site.

Beninbra Ltd Indigoo Ltd

$	$
3,329,600	2,077,440
153,600	167,936
3,483,200	2,245,376
-2,100,000	-1,187,840
-876,000	-331,776
-2,976,000	-1,519,616
507,200	725,760
-76,800	-81,920

Sales revenue Other revenue Total revenue

Cost of sales

Other expenses

Total expenses

Profit before tax Tax expense

Profit for the period		430,400	643,840
Retained earnings at 1 July 2022		1,256,000	422,880
Transfer from general reserve			15,000
Dividend paid		-51,200	-30,720
Dividend declared		-76,800	-15,360

1,558,400	1,035,640
1,024,000	900,000 35,000
2,582,400	1,970,640
102,400	85,800
76,800	102,400
30,720	38,400
1,302,480	1,226,400
1,512,400	1,453,000
4,094,800	3,423,640
224,304	74,640
203,936	93,920
254,800	76,800
780,000 1,680,000	750,000
-924,000	-300,000
2,048,000	819,000
-1,392,640	-307,200
900,000	600,000
150,000	75,000
-60,000	-15,000
192,000	1,536,000
38,400	20,480
4,094,800	3,423,640

Retained earnings at 30 June 2023

Share capital

General reserve Total equity

Provisions

Payables

Deferred tax liabilities

Noncurrent liabilities

Total liabilities Total equity and liabilities

Cash

Receivables

Inventories

Shares indigoo Ltd

Building

Accumulated depreciation building

Plant

Accumulated depreciation plant

Land

Motor vehicles

Accumulated depreciation - motor vehicles

Intangible assets

Deferred tax assets

Total assets

2022-2023 events

• Indigoo Limited sold inventory to Beninbra Limited for $17,000 in May. The inventory had cost Indigoo $14,000, 20% of the inventory was still held as at 30 June 2023.
• Beninbra Limited sold inventory to Indigoo Limited for $4,000 profit In January. The inventory cost Beninbra $20,000. All the inventory has been on sold by Indigoo.
• On 30/6/2023, Indigoo Limited sold a motor vehicle that cost $60,000 for a gain of $2,000 to Beninbra Limited. The vehicle has a further useful life of 4 years and is depreciated at 20%.
• On 30 June 2023, Beninbra invoiced Indigoo Limited $50,000 for management consulting.

Beninbra did not pay the invoice until 15 July 2023.

• In January Indigoo paid its shareholders $30,720. Then in June they declared a dividend of $15,360.
• On 1 April 2023, Beninbra Limited lent $200,000 to Indigoo Limited, at an interest rate of 4% per year. Interest is payable on the last day of every quarter, starting 30 June 2023

Required

1. Use the full goodwill method to determine if there is any goodwill or gain on bargain purchase arises from the acquisition made by Beninbra Ltd. The fair value of the noncontrolling interest on 1 July 2022 was $495,719. (2 marks)
2. Use the partial goodwill method to determine if there is any goodwill or gain on bargain purchase. (2 marks)
3. Using the partial goodwill or gain on bargain purchase calculation from (b), prepare the following journal entries in relation to the preparation of the consolidated financial statements of Beninbra Ltd as at 1 July 2022:
   1. business combination valuation entries (explain/narrate your answers). (4 marks)
   2. pre-acquisition elimination entries, including workings. (1 mark)
   3. entries showing non-controlling interest's share of equity on 1 July 2021. (1 mark)
   4. Prepare the following journal entries in relation to the preparation of the consolidated financial statements of Beninbra Ltd as at 30 June 2023:
      1. Business combination valuation entries (explain/narrate your answers). (3 marks)
      2. pre-acquisition elimination entries., including workings. (1 mark)
      3. entries showing non-controlling interests' share of equity on 1 July 2022. (1 mark)
      4. entries showing non-controlling interest's share of equity from 1 July 2022 to 30 June 2023, show workings. (2 marks) 5.Intragroup elimination entries. (8 marks)
   5. Prepare the consolidation worksheet using entries from d. (5 marks)
   6. Use the consolidated worksheet from e. to prepare the following consolidated financial statements for the year ended 30 June 2023:
      1. Statement of comprehensive income. (1 mark)
      2. Statement of financial position. (3 marks)
      3. Statement of changes in equity. (1 mark)