Exam 27: Consolidation: Other Issues

The following information relates to questions 22 to 24 Jacaranda Limited acquired a 75% ownership interest in Frangipani Limited on 30 June 2014. On the same day, Frangipani Limited acquired a 60% ownership interest in Gardener Limited. The following interentity transactions have taken place between the entities in the group during the years ended 30 June 2014 and 30 June 2015: On 1 July 2013 Gardener sold an item of plant to Jacaranda for a profit of $25 000. The remaining useful life of the plant at the date of transfer was 2 years. On 1 September 2013, Gardener paid a dividend of $100 000 from profits earned prior to 30 June 2013. Jacaranda lent $500 000 to Gardener on 1 January 2014. Interest charged on the loan for the year ended 30 June 2014 was $20 000 and for the year ended 30 June 2015 was $40 000. On 31 May 2014 Frangipani sold inventory to Gardener for $15 000. Profit earned on the sale was $1500. Gardener sold the inventory to external parties on 1 August 2014. Details of profits earned by entities within the group for the years ended 30 June 2014 and 30 June 2015 are: The tax rate is 30%. -The NCI share of profit in the Frangipani group for the year ended 30 June 2014 is:

When preparing consolidation adjustment entries to effect a consolidation of a multiple subsidiary structure intragroup transactions:

The indirect non-controlling interest, in a group that has a multiple subsidiary structure, is entitled to:

In a multiple subsidiary structure the direct non-controlling interest is entitled to a proportionate share of:

Tribulation Limited has an ownership interest of 80% in a subsidiary Trouble Limited. Trouble owns 60% of Strife Limited. Since acquisition date the retained earnings of Strife Limited have increased from $80 000 to $130 000. The direct non-controlling interest in the retained earnings of Strife is:

X Limited has a 70% ownership interest in Y Limited. Y Limited has a 60% ownership interest in Z Limited. X Limited has an indirect ownership interest in Z Limited of:

The following information relates to questions 26 and 27 On 1 July 2012 Yamba Ltd acquired a 60% interest in Zombi Ltd for $42,000. At that date the net assets of Zombi comprised $30,000 share capital and $23,000 retained earnings. All assets were recorded at their fair values, with the exception of an item of land, whose carrying amount was $10,000 less than its fair value. On 1 July 2013 Xtreme Ltd acquired a 50% interest in Yamba Ltd for $65,000. At that date the net assets of Yamba Ltd comprised $50,000 share capital and $60,000 retained earnings. All assets were recorded at their fair values, with the exception of Yamba Ltd's investment in Zombi Ltd, which had a fair value of $54,000. During the twelve months to 30 June 2013 the retained earnings of Zombi Ltd had increased to $30,000. In addition the fair value of the land had increased by a further $10,000. The Xtreme Group accounts for goodwill under the partial method. -The consolidation elimination entry to eliminate Xtreme Ltd's investment in Yamba Ltd at 30 June 2013 will require a credit against the "Investment in Yamba" account of $65,000 and a debit against the Business Combination Valuation Reserve of:

The following information relates to questions 17 to 21 Waratah Ltd acquired a 60% ownership interest in Bottle Brush Ltd on 30 June 2013. On the same day, Bottle Brush Ltd acquired a 70% ownership interest in Honeydew Ltd. The following interentity transactions have taken place between the entities in the group during the years ended 30 June 2014 and 30 June 2015: $\bullet$ On 1 July 2013 Bottle Brush sold an item of plant to Honeydew for a profit of $20 000. The remaining useful life of the plant at the date of transfer was 4 years. $\bullet$ On 1 September 2013, Honeydew paid a dividend of $70 000 from profits earned since 30 June 2013. $\bullet$ Waratah lent $50 000 to Bottle Brush on 1 January 2014. Interest charged on the loan for the year ended 30 June 2014 was $2000 and for the year ended 30 June 2015 was $4000. On 31 May 2014 Honeydew sold inventory to Waratah for $15,000. Profit earned on the sale was $5000. Waratah sold the inventory to external parties on 1 August 2014. Details of profits earned by entities within the group for the years ended 30 June 2014 and 30 June 2015 are: The tax rate is 30%. -The NCI share of profit in Honeydew for the year ended 30 June 2015 is:

Mutual shareholdings exist when:

The following information relates to questions 17 to 21 Waratah Ltd acquired a 60% ownership interest in Bottle Brush Ltd on 30 June 2013. On the same day, Bottle Brush Ltd acquired a 70% ownership interest in Honeydew Ltd. The following interentity transactions have taken place between the entities in the group during the years ended 30 June 2014 and 30 June 2015: $\bullet$ On 1 July 2013 Bottle Brush sold an item of plant to Honeydew for a profit of $20 000. The remaining useful life of the plant at the date of transfer was 4 years. $\bullet$ On 1 September 2013, Honeydew paid a dividend of $70 000 from profits earned since 30 June 2013. $\bullet$ Waratah lent $50 000 to Bottle Brush on 1 January 2014. Interest charged on the loan for the year ended 30 June 2014 was $2000 and for the year ended 30 June 2015 was $4000. On 31 May 2014 Honeydew sold inventory to Waratah for $15,000. Profit earned on the sale was $5000. Waratah sold the inventory to external parties on 1 August 2014. Details of profits earned by entities within the group for the years ended 30 June 2014 and 30 June 2015 are: The tax rate is 30%. -The NCI share of profit in Honeydew for the year ended 30 June 2014 is:

Use the information below to answer questions 4 and 5 Consider the following group structure. -The INCI in B Ltd is the same group of shareholders as the:

The following information relates to questions 17 to 21 Waratah Ltd acquired a 60% ownership interest in Bottle Brush Ltd on 30 June 2013. On the same day, Bottle Brush Ltd acquired a 70% ownership interest in Honeydew Ltd. The following interentity transactions have taken place between the entities in the group during the years ended 30 June 2014 and 30 June 2015: $\bullet$ On 1 July 2013 Bottle Brush sold an item of plant to Honeydew for a profit of $20 000. The remaining useful life of the plant at the date of transfer was 4 years. $\bullet$ On 1 September 2013, Honeydew paid a dividend of $70 000 from profits earned since 30 June 2013. $\bullet$ Waratah lent $50 000 to Bottle Brush on 1 January 2014. Interest charged on the loan for the year ended 30 June 2014 was $2000 and for the year ended 30 June 2015 was $4000. On 31 May 2014 Honeydew sold inventory to Waratah for $15,000. Profit earned on the sale was $5000. Waratah sold the inventory to external parties on 1 August 2014. Details of profits earned by entities within the group for the years ended 30 June 2014 and 30 June 2015 are: The tax rate is 30%. -The NCI share of profit in Bottle Brush for the year ended 30 June 2014 is:

The pre-acquisition entry for the Hayward group in order to consolidate a 60% interest in a subsidiary contained the following debits. Retained earnings $3000, Share capital $6000, General Reserve $1200, BCVR $600. The interest in equity attributable to the direct non-controlling interest is:

The following information relates to questions 22 to 24 Jacaranda Limited acquired a 75% ownership interest in Frangipani Limited on 30 June 2014. On the same day, Frangipani Limited acquired a 60% ownership interest in Gardener Limited. The following interentity transactions have taken place between the entities in the group during the years ended 30 June 2014 and 30 June 2015: On 1 July 2013 Gardener sold an item of plant to Jacaranda for a profit of $25 000. The remaining useful life of the plant at the date of transfer was 2 years. On 1 September 2013, Gardener paid a dividend of $100 000 from profits earned prior to 30 June 2013. Jacaranda lent $500 000 to Gardener on 1 January 2014. Interest charged on the loan for the year ended 30 June 2014 was $20 000 and for the year ended 30 June 2015 was $40 000. On 31 May 2014 Frangipani sold inventory to Gardener for $15 000. Profit earned on the sale was $1500. Gardener sold the inventory to external parties on 1 August 2014. Details of profits earned by entities within the group for the years ended 30 June 2014 and 30 June 2015 are: The tax rate is 30%. -The NCI share of profit in Gardener for the year ended 30 June 2015 is:

Klang Limited has a direct ownership interest of 90% in Liao Limited. Liao Limited has a direct ownership interest of 70% in Meng Limited. The indirect non-controlling interest in Meng Limited is:

Use the information below to answer questions 4 and 5 Consider the following group structure. -The direct non-controlling interest (DNCI) and indirect non-controlling interest (INCI) are:

Which of the following cannot result in a loss of control by a parent over a subsidiary?

An ownership structure in which Orange Limited acquires shares in Pear Limited before Pear Limited acquires shares in Quince Limited is known as:

A Limited has a 60% ownership interest in B Limited. B Limited has a 70% ownership interest in C Limited. As a result of these ownership interests, there is an indirect ownership interest in C Limited of:

Where a parent acquires additional shares in a subsidiary subsequent to obtaining control the change is accounted for: