Interest Revenue 5000 Interest Expense 5000 To eliminate interest on inter

# Interest revenue 5000 interest expense 5000 to

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Interest Revenue 5,000 Interest Expense 5,000 To eliminate interest on inter-company loan Loan Payable 100,000 Loan Receivable 100,000 To eliminate inter-company loan 28
Excerpt from Activity Sales of inventory from Subs Ltd to Parent Ltd left a before-tax unrealised profit in Parent Ltd’s inventory at 30 June 20X4 amounting to \$20,000. RE14,000 Income Tax Expense 6,000 Cost of Sales 20,000 To eliminate unrealised profit in opening stock Calculations RE = (20,000)(1 - 30%) = 14,000 Income tax expense = (20,000)(30%) = 6,000 Note: When calculating NCI, must adjust Sub’s opening RE for after-tax unrealised profit in opening stock and when calculating NCI in profit, must adjust Subs profit for after-tax profit now realised of \$14,000 29
Excerpt from Activity Changes in retained earnings of Subs Ltd for the year ending 30 June 20X5 are: Retained earnings 30/6/X4 \$336,000 Operating profit after tax 165,000 Dividend paid 30,000 Dividend proposed 45,000 Retained earnings 30/6/X5 \$426,000 30
Dividend Income 60,000 Dividend Paid 24,000 Dividend Proposed 36,000 To eliminate parent’s share of dividend paid and proposed Calculation Dividend income = \$60,000 = (\$75,000)(80%) Dividend paid = \$24,000 = (\$30,000)(80%) Dividend proposed = \$36,000 = (\$45,000)(80%) Dividend Payable 36,000 Dividend Receivable 36,000 To eliminate inter-entity dividend payable 31
NCI 15,000 Dividend Paid 6,000 Dividend Proposed 9,000 To adjust NCI for dividends paid and proposed Calculation Dividend paid = \$6,000 = (\$30,000)(20%) Dividend proposed = \$9,000 = (\$45,000)(20%) 32
Excerpt from Activity Shareholders’ equity of Subs Ltd comprised: Contributed equity \$1,300,000 Changes in RE of Subs Ltd for the year ending 30 June 20X5 are: Retained earnings 30/6/X4 \$336,000 Operating profit after tax 165,000 Dividend paid 30,000 Dividend proposed 45,000 Retained earnings 30/6/X5 \$426,000 At 30 June 20X5, Subs’ ARS has a balance of \$238,000 as a result of revaluing land parcel C. There are no other ARSs. 33
Contributed Equity 260,000 BCVR 50,400 ARS 47,600 RE49,560 NCI 407,560 To record NCI in shareholders’ equity accounts Calculations Contrib equity = \$260,000 = (1,300,000)(20%) BCVR = \$50,400 = (\$252,000)(20%). BCVR is NCI interest in BCVR related to valuation of assets and liabilities ARS = \$47,600 = (238,000)(20%) 34
Subsidiary’s opening RE \$336,000 Add: After-tax unrealised loss at beginning of year from sale of assets to parent for loss in prior period 0 Less: After-tax unrealised profit in opening inventory from sale of inventory to parent (14,000) After-tax unrealised profit at beginning of year from sale of non-current assets to parent 42,000 – 12,600 (29,400) NCI’s share of goodwill impairment loss in previous period if full goodwill method used 0 Cumulative incremental depreciation at beginning of year from revaluation of non-current assets at date of acquisition when subsidiary does not revalue the assets on its books 64,000 – 19,200 (44,800 ) Subsidiary’s adjusted RE \$247,800 NCI’s share of opening RE @ 20% \$49,560 35
Excerpt from Activity The statement of comprehensive income of Subs Ltd for the year ending 30 June 20X5 is: Operating profit before tax \$ 240,000 Income tax expense 75,000 Operating profit after tax \$ 165,000 NCI in Profit 33,560 NCI 33,560 To record NCI in adjusted after-tax profit 36
Subsidiary’s reported profit after tax \$165,000 Add: Unrealised profit in opening stock 14,000 Profit from sale of non-current asset to parent realised during current period 6,000 – 1,800 4,200 Unrealised loss from sale of non-current assets to parent during current period 0 Less:

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