Exam 27: Consolidation: Other Issues

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 2015 is:

When calculating the indirect non-controlling interest share of equity, consolidation adjustments are needed to:

The Noor group prepared the following acquisition date entry in order to consolidate a 70% indirect interest in a subsidiary. Retained earnings $35 000, Share capital $70 000, BCVR $21 000. The amount attributable to the indirect non-controlling interest is:

Gamma Limited acquired shares in Delta Limited. At the time of this acquisition Delta Limited already held shares in Epsilon Limited. This form of acquisition of an indirect ownership interest, by Gamma Limited in Epsilon Limited, is known as:

Consider the following group structure:

John Limited has an ownership interest of 80% in a subsidiary Jack Limited. Jack Limited owns 60% of Jill Limited. At acquisition date the retained earnings of Jill Limited were $100 000. At consolidation date the retained earnings of Jill Limited were $220 000. The indirect non-controlling interest in the retained earnings of Jill Limited is calculated as:

The effect of the interest paid by Bottle Brush to Waratah on the NCI of Bottle Brush for the year ended 30 June 2015 is:

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 total goodwill in the Xtreme Group at 30 June 2013 is:

The effect of the dividend paid by Gardener to Frangipani on the NCI of Gardener for the year ended 30 June 2014 is: