Question 5 (22 marks) At the time of acquisition, the equity accounts of Microchips were: Part A (14 marks) Share capital Retained canings 1,500,000 750.000 Computer Patch Ltd acquired 100% shares in Microchips Ltd in the 1 July 2019 for a cast of $ 2 million. The following financinl statements of Computer Patch Ltd and Microchips Lid have been extracted at the time of acquisition All assets are fairly stated. Microchip Computer Patch Lid (SIN)) During the 2019/20 financial year Computer Patch Ltd sells inventory to Microchips Ltd for $250,000. The inventory cost Computer l'atch $200,000 to produce. At year end, 25% of the inventory was still on hand with Microchips Ltd. Lid (STI) 671.4 Required Provide the consolidation elimination journals al 30 June 2020. Reconciliation of opening and closing retained vags Sales revenu less Cost of youk sold Gross Profit Dividends received from Microchips Ltd Management fee revenue from Microchips Ltd Gain on sale of plant 2074 93 26.5 40 540 (278) 102 - 35 Part B (6 marks) (30.8) (29.5) Administrative expenses Depreciation Management fee expense Other expenses Profit before tax Tax capensc Profit for the year Retained earnings - 30 June 2019 (101.1) 2055 61.5 (387) (568) (26.5) 172) 143 42.2 100 N 750.0 850.8 (93) 757.80 Satellite Lid is a company flat is but by COVID-19 crisis and experiencing major trading difficulties. Of late the company las defaulted on its loan with its bank. Conscqucally, the bank has used the powers in the loan agreement to monitoribe company's activatics closely in order to obtain repayment of its debl. The company inust now ablain the butik's authorisation for any expenditure over 10000 and a changes in operations of the company are permited without the bank's approval. Required: Evaluate whether control exists and if so by which party 3194 463.4 (1374) 326.00 Dividends paid Retained camings - 30 June 2020 Statement of financial position Shareholders' equity Retained earnings Share capital Currenr abilities Accounts payabic Non-current liabilities Loans 326 1,3501 757.80 1,500 Part (2 marks) 95.7 46.3 What is meant by the term 'non-controlling interest' (NCT) and is il entitled to a share of the subsidiary equity or some other amount? 817. 2.589.50 116 2.420.10 594 92 448.10 829 Currenses Accounts receivable Inventory Now-carrewe Land Plant - al cost Accumulated depreciation Investment in Microchips Ltd 224 299.85 (85.75) 926 355.8 (1388) 2589.50 2.420,10 Page 10 of 12 Page 11 of 12 Question 5 (22 marks) At the time of acquisition, the equity accounts of Microchips were: Part A (14 marks) Share capital Retained canings 1,500,000 750.000 Computer Patch Ltd acquired 100% shares in Microchips Ltd in the 1 July 2019 for a cast of $ 2 million. The following financinl statements of Computer Patch Ltd and Microchips Lid have been extracted at the time of acquisition All assets are fairly stated. Microchip Computer Patch Lid (SIN)) During the 2019/20 financial year Computer Patch Ltd sells inventory to Microchips Ltd for $250,000. The inventory cost Computer l'atch $200,000 to produce. At year end, 25% of the inventory was still on hand with Microchips Ltd. Lid (STI) 671.4 Required Provide the consolidation elimination journals al 30 June 2020. Reconciliation of opening and closing retained vags Sales revenu less Cost of youk sold Gross Profit Dividends received from Microchips Ltd Management fee revenue from Microchips Ltd Gain on sale of plant 2074 93 26.5 40 540 (278) 102 - 35 Part B (6 marks) (30.8) (29.5) Administrative expenses Depreciation Management fee expense Other expenses Profit before tax Tax capensc Profit for the year Retained earnings - 30 June 2019 (101.1) 2055 61.5 (387) (568) (26.5) 172) 143 42.2 100 N 750.0 850.8 (93) 757.80 Satellite Lid is a company flat is but by COVID-19 crisis and experiencing major trading difficulties. Of late the company las defaulted on its loan with its bank. Conscqucally, the bank has used the powers in the loan agreement to monitoribe company's activatics closely in order to obtain repayment of its debl. The company inust now ablain the butik's authorisation for any expenditure over 10000 and a changes in operations of the company are permited without the bank's approval. Required: Evaluate whether control exists and if so by which party 3194 463.4 (1374) 326.00 Dividends paid Retained camings - 30 June 2020 Statement of financial position Shareholders' equity Retained earnings Share capital Currenr abilities Accounts payabic Non-current liabilities Loans 326 1,3501 757.80 1,500 Part (2 marks) 95.7 46.3 What is meant by the term 'non-controlling interest' (NCT) and is il entitled to a share of the subsidiary equity or some other amount? 817. 2.589.50 116 2.420.10 594 92 448.10 829 Currenses Accounts receivable Inventory Now-carrewe Land Plant - al cost Accumulated depreciation Investment in Microchips Ltd 224 299.85 (85.75) 926 355.8 (1388) 2589.50 2.420,10 Page 10 of 12 Page 11 of 12