The following financial information of Sub Ltd has been extracted from its financial records for the year ended 31 March 2020:      

 

Sales: $780 000

Cost of Sales: 324 000

Gross profit: 456 000

Dividend income: -

Consulting fee income

Expenses: 358 000

Profit before taxation: 98 000

Income tax expense: 39 200

Profit after taxation: 58 800

Retained earnings - opening balance: 290 000

Dividends declared: 20 000

Retained earnings - closing balance: $328 800

 

 

Equity and liabilities

Share capital: 180 000

Retained earnings: 328 800

Asset revaluation surplus: 90 000

Dividend payable: 14 000

Various liabilities: 207 200

 

Assets

Various assets: 736 000

Accounts receivable: 48 000

Inventory: 36 000

 

 

On 1 April 2004, Investor Ltd acquired a percentage of the equity of Sub Ltd. The identifiable net assets were considered to be fairly valued at the date of acquisition.

 

At the date of acquisition the equity of Sub Ltd comprised the following:

                             Share capital                          $180 000

                             Retained earnings                     60 000

                             Asset revaluation surplus          80 000

 

Additional information:

 

(i) During March 2020 Sub Ltd had made sales to Investor Ltd of $9 000. The inventory sold had cost Sub Ltd $6 500. Inventory of Investor Ltd, held at 31 March 2020, included this purchase from Sub Ltd.

 

(iii) During March 2019 Investor Ltd had made sales to Sub Ltd amounting to $7 000. The Inventory sold had cost Investor Ltd $5 000. Inventory of Sub Ltd, held at 31 March 2019, included the inventory purchased from Investor Ltd.

 

(iii) During the year ended 31 March 2020 Sub Ltd had incurred and paid Investor Ltd $17 000 of consulting fees.

 

Required:

Assume Investor Ltd measures the non-controlling interest (NCI) at the proportionate share in the recognised amounts of the subsidiary's identifiable net assets.

 

(i) Prepare the  NCI notional journal entry Note: Your workings must be included on each line of your notional journal entries. 

(ii) Determine the Group amount for the equity account NCI and the Goodwill asset.

(iii) Explain the differences between measuring the NCI at fair value and the alternative measurement basis.