When calculating the NCI share of equity the step approach is used. Demonstrate the step approach, explaining in detail each journal entry, using the following information: Harnesh Ltd acquired 80% of Maxima Ltd for $450 000 cash on 1 July 2016. At that date the equity of Maxima included the following:

Share Capital $400 000

General Reserve 50 000

Retained Earnings 50 000 500 000

All assets and liabilities of Maxima Ltd are at fair value. On 30 June 2018, Maxima Ltd provided the following information:

Retained earnings (1/7/17) $ 80 000

General Reserve (1/7/17) 70 000

Profit after tax 50 000

Dividend paid 10 000