NCI 2007 - to allocate the non-controlling interest in...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Question 15 (10 marks) On 1 January 20X1, Parent Ltd acquired 70% of the ordinary voting shares of Child Ltd which in turn acquired 80% of the ordinary voting shares of Grandchild Ltd. Child Ltd Parent Ltd Grandchild Ltd 70% 80% The fair value of the net assets of Grandchild Ltd at the date of acquisition are represented by total shareholders’ equity as follows: $ Share capital 500,000 Retained profits 600,000 Total shareholders' equity 1,100,000 The net profits of and dividends paid by Grandchild Ltd for the two years ending 31 December 20X1 and 31 December 20X2 are as follows: $ Net profit for 20X1 200,000 Dividends paid for 20X1 (30,000) Net profit for 20X2 400,000 There are no are other changes in the equity for Grandchild Ltd. Grandchild Ltd made a profit after tax of $70,000 from inventory sales to Parent Ltd during the 20X2 year and Parent Ltd has that inventory on hand with at year end. REQUIRED Based on the information provided prepare the consolidation journal entries necessary
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: to allocate the non-controlling interest in Grandchild Ltd as at 31 December 20X2. 2 SOLUTION - QUESTION 15 (10 marks) 1. NCI at date of acquisition 1.1.X1, $1,100,000 x 20% direct interest MARKS DR Share capital 100,000 1 DR Retained profits 1.1.X2 120,000 1 CR NCI 220,000 1 3 2. NCI from 1.1.X1 to 31.12.X1, ($200,000 - $30,000) x 44% direct + indirect interest MARKS DR Retained profits 1.1.X2 74,800 2 CR NCI 74,800 1 3 3. NCI for the year to 31.12.X2, $400,000 x 44% direct + indirect interest MARKS DR NCI share of profit 176,000 1 CR NCI (B/S) 176,000 1 2 4. NCI in unrealised profit after tax of $70,000 x 44% direct + indirect interest MARKS DR NCI (B/S) 30,800 1 CR NCI share of profit 30,800 1 2 Journals 3 and 4 can be combines in the manner shown in the lecture example. Marker’s comments – The average mark was 4.7 out of 10. This was a fairly easy NCI question and we expected students to perform better on this question....
View Full Document

This note was uploaded on 01/31/2012 for the course ACCT 2542 taught by Professor Knapp during the Three '11 term at University of New South Wales.

Page1 / 2

NCI 2007 - to allocate the non-controlling interest in...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online