Train Ltd acquired 60% of Engine Ltd for a cost of $345,600, when the equity of Engine Ltd consisted of:

Share Capital

$80,000

General Reserve

$4,000

Retained Earnings

$4,000

All the identifiable assets and liabilities of Engine Ltd were recorded at fair value except for the following:

Carrying Amount

Fair Value

Equipment (cost $500,000)

$360,000

$400,000

Inventory

$80,000

$100,000

Required:

Prepare the journal entries for the pre-acquisition stage (i.e., Stage 1) of recording the Non-Controlling Interest (NCI) using the partial goodwill method.